Lease Extensions: Statutory Procedure versus Informal Agreement

A leasehold property is a depreciating asset with the ownership of the flat reverting to the freeholder at the end of the lease. Therefore a lease extension should be viewed as a property purchase rather than just a legal matter.  The lease extension cost takes into account that an extension under the Leasehold Reform Act 1993 will be for a term of 90 years longer than the unexpired term of the existing lease at a peppercorn (nil) ground rent.

Sometimes, it is possible for the freeholder and leaseholder to negotiate a non-statutory lease extension subject to mutually agreed terms. In this scenario, a shorter lease extension, perhaps say to 125 years and with a possible rising ground rent, may be acceptable to both parties.

Some freeholders are willing to offer a non-statutory lease extension (normally subject to a rising ground rent) for a revised premium. Freeholders are motivated by this policy as they can retain a value in their freehold interest. 

Agreeing a price for an extension without resorting to the Act may also save professional costs, but it is important to establish that the freeholder is willing to proceed on this basis at the outset.

For case specific advice please contact Richard Stacey MRICS on 020 8567 2448 or via


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