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Extending the Lease of a Flat

Many people do not appreciate that a lease is essentially just a very long tenancy. It allows you to occupy a property for a much longer period but, just as a tenant has to leave at the end of their tenancy, the freeholder is entitled to have a leasehold property back when the lease expires.

This means that when a lease is getting near to its end it can be virtually impossible to sell. Most banks will not lend where the lease has less than a certain number of years to run and the number of potential purchasers is therefore reduced considerably.

Luckily for the owners of leasehold flats, English law gives them the right to serve a notice on the landlord to obtain a new lease with a length of the current term plus another 99 years (there is a similar process for freehold houses which will be covered elsewhere).

The tenant’s notice—assigning the benefit?

There are various requirements that must be met—in particular the applicant must have owned the property for at least two years.

That means that where you are looking to buy a property with a short lease, you may want to consider getting the current owners to start the process and assign the benefit of their notice to you.

That is something that has to be done absolutely correctly or you will not gain the benefit and have to wait a further two years.

Service of the notice fixes the valuation date and if property prices increase in the intervening period, you could have to pay significantly more to extend your lease.

For that reason it is important that you instruct competent and experienced conveyancers to act for you when purchasing. The conveyancing team at Gardner Croft regularly deal with such issues—if you need assistance, please contact them.

The new terms

The tenant’s notice has to set out the terms on which the tenant wants to obtain the new lease.

The general terms of the new lease are set by law and must be the same as the old lease apart from any necessary updating. There must be a peppercorn ground rent and, as set out above, the term is the current un-expired term plus 99 years.

The tenant also has to state the amount that the tenant will pay the landlord for the lease extension.

For a good overview of what is involved in the process, see the Leasehold Advisory Service’s website here.

Marriage value

There is a statutory formula for working out the value and where the lease has less than 80 years left to run the landlord is entitled to what is known as ‘marriage value’.

This is a figure to take into account the fact that if the lease were not extended the landlord would be entitled to take the property back at the end of the lease and sell it again.

This is often a significant sum and if at all possible it is far better to begin the lease extension process before the lease term drops below 80 years.

You will need expert valuation advice. We can arrange to put you in touch with someone suitable.

The landlord’s counternotice

Once the notice has been served, the landlord must respond within the period set out in the tenant’s notice and state whether he agrees that the tenant has the right to extend their lease and whether the proposed premium and terms are agreed.

If they are not agreed, the landlord must make counterproposals.


The landlord is also entitled to require the tenant to pay a deposit of 10% of the premium proposed by the tenant. The landlord can ask for this deposit at any time after receiving the tenant’s notice.


There is then a period for negotiations during which time the tenant’s and landlord’s valuers will try to reach agreement on a price and the respective solicitors may negotiate on the terms of the new lease.


If agreement cannot be reached, the tenant can apply to the First Tier Property Tribunal who will determine the premium to be paid and any other terms in dispute.

Time Limit

That application cannot be made sooner than two months from the date the Landlord serves her counter-notice but must be made within six months of that date.

If the application is not made in time, the tenant loses the benefit of the notice and has to wait at least 12 months before serving another notice.

It is therefore important that you and your advisers keep an eye on the time-limit.

Gardner Croft Solicitors can steer you through the process and ensure that you obtain peace of mind.

If we can assist you with a lease extension, please contact us.