Leaseholders of houses normally have the right to extend the lease by 50 years after they have owned the lease to the property for at least two years. You have to follow certain rules, and pay all the legal fees involved. Your ground rent may increase.
If your lease covers only part of a converted house the rules on extending the lease on a flat apply to your home.
How does a short lease affect the ability to sell?
It can be difficult to sell a property if the lease has less than 75 years left to run. Extending the lease probably makes your home more attractive to buyers.
Potential buyers may have problems getting a mortgage on a short lease and wouldn't be able to extend it themselves for at least the first two years.
Buying the freehold
- you no longer have to pay ground rent or services charges
- it probably increases the value of your home and make it easier to sell
- you have more control over repairs
However, not all leaseholders can buy the freehold. It will only be an option if you qualify and can afford it.
What happens if a lease ends?
If your lease ends, you no longer own your home. You might be able to negotiate a new lease with the freeholder but this is not guaranteed.
You become an assured tenant if the freeholder refuses to give you a new lease. The freeholder is your landlord and you must pay a market rent. An assured tenancy gives you fairly strong rights but it is not as secure as being a leaseholder. You would also lose any financial stake you have in the property.
If your lease has ended or is about to run out, get advice immediately.
Contact the Leasehold Advisory Service, a solicitor or an advice centre in your area.
Use our advice services directory to find a local adviser.
Can a lease be extended?
Most leaseholders of houses have the right to extend their lease. To qualify, you must have owned your lease for at least two years. It is no longer necessary to have lived in the property during that time.
There are some exceptions. You may not be able to extend your lease if:
- your lease has already ended
- your lease was originally granted for less than 21 years
- you have sublet the property on a lease of at least 21 years
- the freeholder is a charitable housing trust
- you have a business lease
- your lease has been extended in the past (leases on houses can only be extended once)
Get advice if you are in any of these situations or have been told you can't extend your lease for another reason. Use our directory to find a local adviser. Freeholders sometimes get it wrong and may not be aware that the law has recently changed. Even if you can't extend your lease you probably still have the right to buy the freehold.
How can a lease be extended?
You have to follow the correct legal procedure to extend your lease. You have to apply before your original lease ends. It's usually less complicated than buying the freehold but you may still need to hire a solicitor.
The Leasehold Advisory Service provides information if you want to extend the lease yourself. The basic steps are explained below.
Giving written notice to the freeholder
You have to send a formal written request ('initial notice') to start the process. The notice has to include:
- your name and address
- details of the existing lease (including when it was originally granted and how much ground rent you pay)
- evidence to show that you qualify
- the deadline for the freeholder's response (you have to give her/him at least two months to reply)
If you want to propose changes to the existing lease, these should also be included in the notice.
The contact details for the freeholder should be included on any bills you receive for ground rent and service charges. If it isn't, you can make a formal written request from whoever you make these payments to. You should get all the details within 28 days. If you have problems, get advice.
The freeholder's response
The freeholder has to respond by the deadline you gave in the initial notice. Their response ('counter notice') must say whether or not they think you have the right to extend your lease. If they do not reply, you have six months to apply for a court order.
The freeholder can only refuse to extend the lease on your house if:
- they want to demolish or redevelop it
- they want to live in it or let a member of their family live in it
In either of these situations, the freeholder has to get a court order. The court decides whether the freeholder has the right to refuse.
You are entitled to compensation if the court decides the freeholder can refuse to extend the lease. If you are in this situation, get advice.
The new lease
The new lease has to be for 50 years plus the number of years left on the original lease. It is basically the same as the original lease, unless you and the freeholder agree to change it.
You can apply to a leasehold valuation tribunal (LVT) for help in sorting out disagreements about the new lease.
Leases on houses can only be extended once. However, you still have the right to buy the freehold before the extended lease ends.
Costs of extending the lease
You don't have to pay the freeholder for extending the lease. However, you have to pay all the legal costs involved, for both yourself and the freeholder. This can be expensive but it usually works out cheaper than buying the freehold.
If you extend your lease, your ground rent is likely to increase. It can only be increased after the time left on your original lease has ended. The new ground rent is based on the value of the property at the time the lease is extended. It can be increased again after 25 years.
A leasehold valuation tribunal (LVT) can set a reasonable ground rent if you can't agree with the freeholder.