If you own a leasehold property, a lease extension is one of the most important steps you can take to protect the long-term value of your home. Extending your lease makes your property more attractive to buyers and prevents it from losing value as the remaining term reduces.
There are two main routes to extend your lease: through a voluntary lease extension agreed with your freeholder, or a statutory lease extension under the Leasehold Reform, Housing and Urban Development Act 1993 (“the 1993 Act”).
From experience, most leaseholders utilise the statutory process as it sets down clear deadlines at every stage so that the freeholder cannot deploy delay tactics.
Lease Extension Costs – What to Expect
The cost of a lease extension (known as the “premium”) is based on several factors, including:
- The current value of your property
- The length of your existing lease
- Annual ground rent
- Any improvements made to the property
- Other valuation factors
Because the calculation is complex, most leaseholders instruct a specialist valuation surveyor to provide advice on the likely premium. No matter which route you take, obtaining a valuation ensures the amount you agree to pay is good value.
It’s also important to be aware that the leaseholder pays not only their own surveyor and solicitor but also the freeholder’s costs.
Voluntary Lease Extension
A voluntary lease extension is an informal agreement made directly between the leaseholder and the freeholder. Unlike the statutory route, there are no fixed rules or deadlines about who does what and when.
- Flexibility of terms – Any price can be put forward initially, and the leaseholder and freeholder are free to renegotiate the entire lease. This includes the premium (price), the length of the lease extension, and any other terms.
- Dependent on freeholder’s goodwill – The freeholder cannot be compelled to grant a voluntary lease extension, so the process relies entirely on their cooperation.
- Potential savings – This route can sometimes reduce costs and timescales compared to the statutory process.
- Risks – Because all terms are open to negotiation, the freeholder could propose unfavourable conditions, such as a higher premium, shorter lease term, or ongoing ground rent provisions.
While voluntary lease extensions can work well in some situations, leaseholders should be cautious. Without the legal protections of the statutory process, the freeholder holds much of the negotiating power.
Statutory Lease Extension
A statutory lease extension gives qualifying leaseholders a legal right to extend their lease by 90 years and reduce ground rent to a peppercorn (effectively zero). The process is set out by the 1993 Act and provides a clearer framework with strict deadlines, limiting the freeholder’s ability to stall negotiations.
This process typically takes 6–12 months. Where a freeholder is absent or fails to respond, we have a specialist team who can advise and make the appropriate application to the Court.
Voluntary vs Statutory – Which Should You Choose?
- Voluntary lease extension – Faster and more flexible, but risky as the freeholder sets the terms.
- Statutory lease extension – Provides security, fairer terms, and guarantees a 90-year extension with ground rent reduced to zero.
For this reason, many leaseholders prefer the statutory process, as it prevents delay tactics and gives greater protection.
Expert Help with Lease Extensions
At Talbots Law, our dedicated leasehold solicitors specialise in both voluntary and statutory lease extensions.
Get in touch with the team today, call us on 0800 118 1500 or fill out the form below:
Disclaimer
This blog was written by Amandeep Uppal, Director & Solicitor in our Property Litigation team, specialising in Block Management. The contents of this blog or any other published by Talbots Law cannot be considered as legal advice. You should take no action without prior consultation with a qualified solicitor or legal professional. The contents of this blog refers to the process in England and Wales.