Owning a leasehold property means that your right to occupy it lasts for a fixed number of years.
As the remaining term becomes shorter, the property may become less valuable and more difficult to sell or mortgage. Extending the lease can protect the property’s marketability and provide long-term security.
Lease-extension law is technical, however, and the process can involve strict notices, valuation evidence and deadlines. Leaseholders should obtain advice before beginning negotiations or serving a statutory claim.
What is a lease extension?
A lease extension increases the remaining term of a residential lease.
Under the statutory regime currently operating, a qualifying flat owner may generally obtain an additional 90 years, with the ground rent reduced to a peppercorn. A qualifying leaseholder of a house may currently have a different statutory right, generally involving a 50-year extension under the Leasehold Reform Act 1967.
A leaseholder may also approach the freeholder to negotiate an extension informally. An informal agreement can sometimes be quicker, but it may contain less favourable terms, including:
- a shorter additional term;
- continuing or increased ground rent;
- new restrictions;
- changes to service-charge provisions; or
- a premium calculated differently from the statutory basis.
The proposed lease and the overall financial effect should be reviewed carefully before an informal offer is accepted.
Why does the remaining term matter?
A lease is a diminishing asset. Each year that passes reduces the remaining term.
A shorter lease may affect:
- the property’s value;
- a buyer’s willingness to proceed;
- mortgage availability;
- the premium payable for an extension; and
- the speed and complexity of a sale.
Some lenders apply minimum lease-length requirements. These vary, so buyers and sellers should not assume that every lender will take the same approach.
Why is 80 years important?
Under the present valuation framework, extending a lease can become significantly more expensive once the remaining term reaches 80 years or fewer.
This is because “marriage value” may become payable. Broadly, marriage value reflects part of the increase in the property’s value produced by combining the existing leasehold interest with the additional lease term.
Official guidance warns that the cost of extending rises significantly at 80 years or below.
Leaseholders approaching that point should seek advice promptly. Waiting may materially increase the premium.
Do you still need to own the property for two years?
No, not for the relevant statutory claims covered by the reform.
The former two-year ownership requirement was removed with effect from 31 January 2025. An eligible leaseholder can now generally begin a statutory lease-extension or enfranchisement claim after acquiring the property, without waiting two years.
Eligibility still depends on the property, the lease and the statutory conditions, so the title and lease should be checked before a claim is started.
What does the statutory process involve?
For a flat, the statutory process will commonly include:
- checking that the lease and leaseholder qualify;
- instructing a specialist valuer;
- reviewing the title and lease;
- serving a formal notice proposing a premium;
- paying any required deposit;
- receiving the landlord’s counter-notice;
- negotiating the premium and lease terms;
- applying to the tribunal within the prescribed period if terms cannot be agreed; and
- completing and registering the new lease.
The deadlines are important. Missing one may cause the claim to be treated as withdrawn and may lead to additional expense.
The landlord may also be entitled to recover certain reasonable legal and valuation costs under the statutory procedure, although not generally the landlord’s costs of negotiating the premium or participating in tribunal proceedings.
How is the premium calculated?
The premium is not based solely on the number of years remaining.
A specialist valuer may consider matters including:
- the current value of the property;
- the remaining lease term;
- the ground rent;
- the value of the landlord’s reversion;
- applicable valuation rates; and
- marriage value where relevant under the current system.
Online calculators may provide a broad indication, but they should not be relied upon as a substitute for a professional valuation.
The premium proposed in a statutory notice must be realistic. An artificially low figure may create legal risk.
Statutory or informal extension?
There is no single answer suitable for every leaseholder.
Possible benefits of the statutory route
The statutory process provides a defined legal framework and prescribed lease terms. For flats, it currently provides an additional 90 years and a peppercorn ground rent.
Possible benefits of an informal agreement
An informal agreement may be quicker and can allow the parties to negotiate more flexible terms.
However, leaseholders should be cautious of an apparently low premium accompanied by:
- escalating ground rent;
- a short extension;
- new fees;
- restrictive covenants; or
- unfavourable changes elsewhere in the lease.
The premium should always be considered alongside the full wording of the new lease.
Selling a property with a short lease
A short lease can complicate a sale.
Possible options may include:
- completing the extension before marketing;
- beginning the statutory process and assigning the benefit to the buyer, where legally possible;
- negotiating an informal extension; or
- selling at a price that reflects the remaining term.
The removal of the two-year ownership requirement has changed the practical position for purchasers, but a short lease may still affect valuation, lending and negotiations.
Advice should be obtained early rather than waiting until a buyer has been found.
What has changed under the Leasehold and Freehold Reform Act 2024?
The Leasehold and Freehold Reform Act 2024 provides for substantial changes, including:
- standard lease extensions of 990 years for houses and flats;
- peppercorn ground rent following a statutory extension;
- a revised valuation system;
- abolition of marriage value; and
- other changes intended to simplify enfranchisement.
However, not all of these provisions are yet fully operational.
As at July 2026, the removal of the two-year ownership requirement is in force, but the Government is still consulting on aspects of the new valuation framework and implementing other reforms. Official materials confirm that the 2024 Act provides for 990-year terms and a new valuation process, while further implementation work remains underway.
Leaseholders should therefore avoid assuming that the promised 990-year term or abolition of marriage value automatically applies to a claim begun today. The position must be checked at the time the claim is made.
Does the law apply in both England and Wales?
The principal statutory lease-extension legislation applies in England and Wales. However, housing policy and administration can differ between the two nations, and some government guidance is specifically directed at properties in England.
A leaseholder in Wales should obtain advice that accounts for the property’s location and the legislation and commencement arrangements applying at the relevant time.
How Penerley Solicitors can help
Lease extensions require coordination between the leaseholder, solicitor, valuer and freeholder.
Penerley Solicitors can assist with:
- checking eligibility;
- reviewing the lease and title;
- serving and responding to statutory notices;
- advising on deadlines;
- reviewing informal offers;
- negotiating the terms of the new lease;
- completing the extension; and
- registering the new lease at HM Land Registry.
Taking advice early can help avoid missed deadlines, unsuitable informal terms and unnecessary increases in cost.
Contact Penerley Solicitors for advice about extending the lease of your house or flat.
