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 will also probably go up.
If your lease covers only part of a converted house the rules on extending the lease on a flat will 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 will probably make 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.
Is it better to buy the freehold?
- you will no longer have to pay ground rent or services charges
- it will probably increase the value of your home and make it easier to sell
- you will 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 will no longer own your home. You might be able to negotiate a new lease with the freeholder but this is not guaranteed. If the freeholder refuses to give you a new lease, you will become an assured tenant. The freeholder will be your landlord and you will have to pay a market rent. Assured tenancies give you fairly strong rights but it is not as secure as being a leaseholder and you lose any financial stake you have in the property. If your lease has ended or is about to run out, get advice immediately. 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. However, 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).
If you are in any of these situations or have been told you can't extend your lease for another reason, get advice. 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. This page only provides an introduction to the process. 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 do it 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. Her/his response ('counter notice') must say whether or not s/he thinks you have the right to extend your lease. If s/he doesn't reply, you have six months to apply for a court order. The freeholder can only refuse to extend the lease on your house if:
- s/he wants to demolish or redevelop it
- s/he wants to live in it or let a member of her/his family live in it.
In either of these situations, the freeholder has to get a court order. The court will decide whether s/he has the right to refuse. If the court decides s/he can do so, you will be entitled to compensation. 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 will be basically the same as the original lease, unless you and the freeholder agree to change it. If you have disagreements about the new lease, you can apply to a leasehold valuation tribunal (LVT) to sort them out.
Leases on houses can only be extended once. However, you still have the right to buy the freehold before the extended lease ends.
How much will it cost?
You don't have to pay the freeholder for extending the lease. However, you will 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 very likely to go up. It can only be increased after the time left on your original lease has ended. The new ground rent will be based on the value of the property at the time the lease is extended. It can be increased again after 25 years. If you can't agree a reasonable ground rent with the freeholder, a leasehold valuation tribunal (LVT) can set it.