Lease Extension

A lease extension increases the remaining term of a leasehold property's lease. For residential leaseholders in England and Wales, the Leasehold Reform, Housing and Urban Development Act 1993 gives qualifying owners the statutory right to extend their lease by 90 years (added to the remaining term) at a zero ground rent.

Lease extensions become necessary as the remaining lease term decreases. The key thresholds: - Below 80 years: the cost of extending increases significantly due to "marriage value" (the freeholder's share of the uplift in value that extension creates) - Below 70 years: many mortgage lenders are reluctant to lend against the property - Below 60 years: severely restricts mortgageability and resale potential

For investors considering leasehold properties, always check the remaining lease length. A property with 73 years remaining is functionally different from one with 110 years remaining, even if otherwise identical.

The statutory extension process involves serving a formal notice on the freeholder, negotiating (or adjudicating) the premium, and completing the legal extension. Costs include the premium paid to the freeholder, your solicitor's fees, the freeholder's legal costs (which you must pay under statute), and a valuer's fees. Total costs on a typical flat might be £5,000-£15,000 depending on the premium.