Extending a lease

You can make a statutory claim to extend your lease if you meet these requirements:

• You have a long lease of a flat. This means that your lease was originally given for more than 21 years. Most leases of flats that are used for residential purposes are long leases.
• You have owned the lease for at least two years. This is calculated from the date that you became the registered owner of the lease at the Land Registry. You do not have to live in the flat for two years, just own it.

Be careful: if you transfer the ownership of the flat, even from one name to two names, you may have to wait for another two years before you can make a claim.

You may also have a separate lease of other property that you use with your flat, such as a garage, parking space, storage cupboard or garden. You may be able to include this property in your claim, but only if certain conditions are met.

We can help you check if your lease, the use of your flat and the building qualify for a lease extension claim and if you can add any extra property to your claim.

You can renew your lease for another 90 years with the statutory process, which means you pay a fair price and get a new lease instead of the old one. You also don't have to pay ground rent under the new lease.

To start the process of extending your lease, we will send a formal notice to your landlord. Your notice will have the necessary information to make it valid, such as:

• Important details to show that you are eligible for the lease extension.
• The amount you are willing to pay for the lease extension and any changes you want to make to the terms of your lease.

Sometimes we may need to send your notice to other parties, such as a management company.

Your landlord can do various things after receiving your notice, including:

• Asking for evidence that you own the flat and have done so for at least two years. Your landlord must ask for this within 21 days of getting your notice. We then have 21 days to provide it.
• Asking for a deposit. This deposit is either £250 or 10% of the total amount you offer in your notice, whichever is higher. The landlord can ask for the deposit any time after getting your notice and you will have 21 days to pay after the request.
• Looking at the flat at a reasonable time, as long as it gives you at least three days' notice. The landlord will usually use this right for valuation purposes.

The price of a lease extension depends on a complex formula that takes into account various factors, such as the flat’s value when the notice was given, the remaining lease term and the ground rent for the lease. There is a range of possible prices because some of the factors are subjective.

You should get a specialist surveyor to value the extension before starting the process, so that they can suggest a price in their notice. The surveyor should also give an estimate of the highest price, if the landlord wants to negotiate.

The landlord may not accept the suggested price and may counter with a higher amount. Then, negotiations will follow to agree on the price and the other terms of the purchase. We and the surveyor can help with these negotiations.

Besides the extension price, there will be other costs to pay, such as:

• Our fees and the surveyor's fees, including any expenses (such as a fee for registering the purchase at the Land Registry).
• The reasonable fees of the landlord's lawyer and surveyor for dealing with the claim, preparing a valuation and transferring the freehold. It is hard to predict these fees as they depend on the landlord's lawyers and how long the process takes.
• Any stamp duty land tax that might be due on the price. We can tell you how much it is once the price is settled.

The answer depends on how much time is left on the lease and how it affects the selling price. A lease with 80 years (or less) remaining can lower the value of your flat significantly.

You have two options if you want to extend the lease. You can either do it yourself before you sell, or you can start the process and then transfer it to the buyer, who will pay for it and complete it. The second option can save you time and money, and also allow the buyer to extend the lease as soon as they buy the property, without waiting for two years to become eligible.

You might save time and money by extending your lease informally through a negotiation with your landlord. However, you should check the details of any informal offer carefully and know the risks of not using the legal steps.

The legal steps have some advantages, such as:

• There is a fixed schedule for agreeing and finishing the lease extension. Without this, the landlord can drag out or even cancel the terms, without any penalty.
• There is a fixed method for deciding the price. Landlords who offer informal terms may ask for a higher price, so you still need to get valuation advice.
• You are sure to get a 90-year lease extension, with no ground rent from the date the extension is done.

The informal process will not work if you are planning to sell your flat as the talks with the landlord will usually be only for you. If you extend your lease informally, you will need to have done the extension with the landlord before you sell, unless the landlord is willing to promise the same terms to your buyer.

The government has proposed to make it easier and cheaper for tenants of flats to extend their leases. These include a right to extend a lease by 990 years (rather than 90 years) and different ways of calculating the price to reduce the cost. However, there is a lot of detail still to work out and no timescale for the changes. It could be years before they come into effect.

Whether you should extend your lease now or wait for the changes in the law depends on various factors, including the number of years left on your lease and whether you plan to sell the flat in the near future.