Conveyancing

Lease Extensions

Our residential lease extension solicitors at Davisons offer high-quality legal advice to both leaseholders and freeholders. Whether you are a leaseholder or a freeholder, we will help you protect your property's future value and negotiate the best possible lease extension terms.

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What is a lease extension?

Leasehold properties, such as flats and maisonettes, are typically leased by a freeholder (the landlord) to a leaseholder (the tenant). Leases usually run between 99 and 125 years.

If the leaseholder does not extend a lease before it runs out, then ownership of the residential property returns to the freeholder.

Why extend your lease now?

A leasehold property with a short lease (less than 80 years) can be difficult to sell for the market value and to re-mortgage if needed. Many mortgage companies will not lend on properties with less than 70 years to run on a lease.

As the market value of your property increases over time, the cost of extending your lease will go up too, so it is better to extend it sooner rather than later.

On top of this, when a lease has 80 years or less left to run, the freeholder can charge extra to extend the lease. This is known as ‘marriage value’ under the Leasehold Reform Act 1993. The amount is equivalent to 50% of the increase in value that will happen due to the lease being extended.

We recommend extending the lease on your property when you have between 85 and 95 years left to run to save yourself significant expense. If your lease is almost down to 80 years, we strongly recommend that you speak to us so we can help you to avoid paying ‘marriage value’, which can amount to thousands of pounds.

Extending your lease also has the benefit of reducing your ground rent. Under the Leasehold Reform Act 1993 ground rent is replaced by a small ‘peppercorn rent’, saving you money every year.

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Do you have the right to extend your lease?

To apply for a lease extension under the Leasehold Reform Act 1993, you must have owned your leasehold property for a minimum of two years, and the lease must have been granted for at least 21 years originally. There are exceptions, and our lease extension lawyers at Davisons can advise you. If you qualify, you have the right to extend your lease by 90 years under the Act.

The first step is to serve the freeholder a Section 42 Notice, which is a formal request to extend your lease. If you meet the legal conditions, the freeholder cannot usually refuse your request. The freeholder must serve a counter-notice within two months of receiving the Section 42 Notice stating whether they accept your right to extend the lease or not.

Our lease extension solicitors can help you negotiate the premium you pay for a lease extension and the amount you pay for the freeholder’s legal costs. If an agreement cannot be reached, we will help you resolve the dispute through negotiation or mediation or, failing that, through the First Tier Property Tribunal.

Should you buy a property with a short lease?

You can buy a leasehold property with a short lease, but it is advisable to ask the seller to serve a formal Section 42 Notice to the freeholder to extend the lease before the sales process has legally been completed. The seller can then transfer the benefit of the notice to you, which means you will not need to wait until you have lived in the property for two years to apply for a lease extension under the statutory route.

At Davisons, we can manage a Section 42 Notice for you as part of the conveyancing process. Extending a lease is a cost-effective way to increase the value of your new property immediately.

Why choose Davisons lease extension solicitors?

Our experienced lawyers at Davisons specialise in residential lease extensions. If you are a leaseholder or a freeholder, we will ensure your interests are protected whether you have decided to go through the statutory route or to negotiate informally with the other party.

We have the expertise to negotiate the best possible lease extension terms for you and to provide you with strong representation at a First Tier Tribunal if necessary.

Have any questions or need any help?

Our team of specialist lawyers are experts in their field. Be confident in their advice and decisions to help get the right outcome for you. Contact us today to see how we can help

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Lease Extensions FAQs

How can Davisons solicitors support freeholders?

Both leaseholders and freeholders need expert legal advice when it is time to extend a lease. At Davisons, our solicitors have many years of experience in protecting freeholders’ interests.

When you receive a Section 42 Notice, our solicitors can check that the leaseholder has the legal right to extend the lease and what your options are. For example, if the lease will run out within five years, then you may be able to object to the extension on the grounds that you plan to redevelop the property. We can also advise you whether the lease premium stated on the notice is high enough and, if not, negotiate a greater premium.

The statutory route set out by the Leasehold Reform Act 1993 requires you to follow a set timescale. We can help you comply with the timeframe and guide you through what can be a complex process. Failure to serve a counter-notice to the Section 42 Notice within the timescale can mean the leaseholder applies to the court for a vesting order. This means the court will grant an order to vest the lease on the terms set out in the Section 42 Notice, which may not serve your interests.

If you and the leaseholder agree to extend the lease informally, we can help you negotiate more favourable terms. This might mean negotiating a higher premium to grant the lease extension, new ground rent terms or granting a shorter lease than the statutory 90 years.

How can you find out how much time is left on your lease?

You can work out how many years are left by checking your lease agreement. The agreement will state the date the lease commenced and the length of the lease.

What if you have lived in your property for less than two years?

If you have lived in your property for less than two years, you could negotiate an informal or voluntary lease extension with the freeholder rather than following the statutory route under the Leasehold Reform Act 1993.

The advantage of the informal route is that you can save money by not having to pay for the Section 42 Notice. You can also agree on any length of the lease with the landlord.

However, if you decide to take the informal route is very important to seek legal advice to ensure your interests are fully protected. The process can take months to complete as the freeholder is not bound by statutory timescales as they are if you take the formal route. The freeholder might also expect you to pay a higher premium for extending the lease. They might extend your lease for a short period of time with no guarantee the lease will be extended further in the future. They can also increase the ground rent rather than reducing it as they would have under the statutory route.