A lease extension is the legal process of increasing the length of a residential leasehold property in England and Wales. Leasehold ownership is most common for flats, although some houses are also sold on a leasehold basis. When a property is leasehold, the owner has the right to occupy it for a fixed number of years rather than owning it outright.
As each year passes, the remaining term of the lease reduces. This matters because a lease is a diminishing asset. The shorter the lease becomes, the more it can affect the value of the property and the more difficult it can be to sell or remortgage. A lease extension restores value by adding additional years to the lease and improving its long term security.
In England and Wales, many leaseholders have a statutory right to extend their lease under the Leasehold Reform Housing and Urban Development Act 1993. For flats, this right allows qualifying leaseholders to add 90 years to their existing lease and reduce ground rent to a peppercorn, which effectively means no ground rent. This statutory protection is designed to give leaseholders certainty and fairness.
Lease extensions can also be agreed informally with the freeholder. An informal lease extension is negotiated outside the statutory framework and may offer flexibility, but it can come with less favourable terms, such as higher ground rent or future rent increases. Careful legal advice is essential before agreeing to informal terms.
At Penerley Solicitors, lease extensions are treated as a specialist area of residential property law. Understanding the legal structure of your lease, your statutory rights, and the financial implications of extending is critical to making the right decision.
When Should I Request a Lease Extension?
Knowing when to request a lease extension is one of the most important factors in controlling cost and protecting property value. In England and Wales, the key point to be aware of is when the lease term falls below 80 years. Once this happens, the cost of extending the lease increases significantly because marriage value becomes payable. Marriage value reflects the increase in the property’s value after the lease is extended, and the law requires this uplift to be shared with the freeholder.
For this reason, many leaseholders are advised to begin the lease extension process while there are more than 80 years remaining. In practice, starting the process when the lease has between 83 and 90 years left allows enough time for valuations, negotiations, and legal steps without risking unnecessary additional cost.
There are also practical reasons to request a lease extension beyond avoiding higher premiums. Mortgage lenders often have minimum lease length requirements. Many lenders will not lend on properties with short leases, particularly where the remaining term is below 70 to 75 years. A short lease can therefore limit your ability to remortgage or attract buyers.
Leaseholders should also be aware of the ownership requirement. To qualify for a statutory lease extension, you must usually have owned the property for at least two years. This makes early planning especially important if you are approaching the 80 year threshold.
Common reasons clients approach Penerley Solicitors for lease extension advice include:
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The lease is nearing or below 80 years
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They are planning to sell or remortgage
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The property value is being affected by lease length
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They want certainty over ground rent and future costs
Early legal advice can prevent delays, reduce stress, and avoid paying more than necessary.
How Long Can a Lease Be Extended For?
The length of a lease extension in England and Wales depends on whether the extension is completed through the statutory route or via an informal agreement with the freeholder.
For flats, the statutory process provides a clear and valuable benefit. Qualifying leaseholders are entitled to add 90 years to their existing lease term. For example, if a flat has 68 years remaining, the extended lease will run for 158 years. The ground rent is reduced to a peppercorn, meaning no ongoing ground rent payments.
For leasehold houses, the statutory extension generally adds 50 years to the existing lease. However, many house leaseholders choose to explore buying the freehold instead, as this removes the lease entirely and can provide greater long term control.
Informal lease extensions can vary widely in length. A freeholder may offer an extension of 99 years or 125 years, but these offers often come with conditions such as increased ground rent or escalation clauses. While informal agreements can sometimes appear attractive, they can create problems later, particularly when selling or refinancing.
There is no maximum legal length for a lease extension. Long leases of 150 years or more are often treated by buyers and lenders as equivalent to freehold for practical purposes. What matters most is ensuring the lease length supports the property’s value and future marketability.
The cost of extending a lease depends on several factors, including the remaining lease length, the property value, and the ground rent terms. Extending earlier almost always results in lower overall costs. Specialist legal advice helps ensure the process is handled correctly and that your rights are fully protected.
How Penerley Can Help
If you own a leasehold property and are concerned about your lease length, taking action early can save you time, money, and unnecessary stress. A short lease can significantly reduce property value and restrict your future options.
Penerley Solicitors provide clear, practical advice on lease extensions across England and Wales. Contact the team today to discuss your lease, understand your rights, and take confident steps toward protecting your property investment.
