Step-by-step guide to extending your lease
In July 2020, the Law Commission published proposals to change the lease extension and enfranchisement process.
We've not been advised on when or how these proposals will be implemented or how the law will be changed, therefore we recommend that you review the Law Commission page before proceeding with any application.
The information below about extending your lease will give you a brief outline of the process and the costs involved. The information provided doesn't cover every lease extension case and isn't meant to describe or give a full interpretation of the law, as only the courts can do that.
What is a lease term?
When you own a leasehold property, you're granted a lease term. This is the number of years that you own the lease of a particular property. On a new property, the lease term will usually be 99 or 125 years.
What happens if I don’t extend my lease?
The longer you own the property, the less time there'll be left on the lease. As the years of the lease reduce, the value of the property also reduces. So, the less time left on the lease, the less valuable the property becomes.
Properties with short lease terms often experience difficulties when being sold. If a mortgage is required, the purchaser may find it difficult to secure a mortgage as mortgage providers often don't lend on properties with short leases.
If the lease is not extended, eventually your lease term will end. If this happens, the property will revert to the freeholder.
For these reasons, the law gives you the right to extend your lease once you've owned it for two years.
How much will it cost me to extend my lease?
Cost of the premium
The cost of the premium for extending your lease will depend on the value of the property, the number of years left on the lease, the annual ground rent and the value of improvements done to the property paid for by you.
As you know, the longer you own the property, the less time there is left on the lease. The less years on the lease means the cost of the premium is higher.
If you extend your lease with less than 80 years remaining, there's an additional fee that you pay to us. This fee is called a Marriage Fee.
When you extend a lease with a remaining term of 80 years or more, no marriage fee is payable. You should always look to extend a lease before it hits the 80 year mark for this reason.
You can get an idea of the cost of the premium by visiting the website links:
What other costs are there?
In addition to the costs of the premium, you'll have to pay:
- The costs of getting legal advice (your solicitor)
- The cost of our valuation report
- The legal costs of our solicitors
- Our administration fee.
Extending a lease can be confusing and expensive, so we always recommend that you seek professional legal advice from a solicitor. If you don't seek professional advice, you might find the lease extension process longer and potentially more expensive.
How long will it take to extend my lease?
Under the Leasehold Reform Housing and Urban Development Act 1993 there are strict timelines which need to be adhered to by both parties.
The process of extending your lease normally takes between three and six months.
How can I keep lease extension costs down?
The more years you have to buy, the higher the cost of the premium. To help reduce the cost of extending your lease, you should request a lease extension as soon as possible. If your lease has less than 80 years remaining, the costs of the premium will be substantially more than if you extend your lease with more than 80 years remaining.
What are the steps to extending my lease?
This depends on the type of property you own. Please click on one of the links below for more information:
- Flats who own 100%
- Houses who own 100%
- Retirement Living bungalows who own 100%
- Retirement Living flats who own 100%
- Retirement Living shared owners
- Shared owners