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Most leaseholders of flats have the right to extend the lease for 90 years after they have owned the lease to the property for at least two years. You have to follow certain rules but it's usually less complicated than buying a share of the freehold. You will have to pay all the legal fees involved.

If your lease covers the whole house (whether it has been converted into flats or not) the rules on extending the lease on a house will apply to your home.

If you need advice, contact the Leasehold Advisory Service, a solicitor or an advice centre in your area (use the Advice Services Directory to find one).

How does a short lease affect my ability to sell?

It can be difficult to sell a property if the lease has less than 50 or 60 years left to run. 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.

Extending the lease will probably make your home more attractive to buyers. You sell the longer lease on with the property. It will probably increase the price you are likely to get by more than you have to spend to extend it.

Is it better to buy the freehold?

If you can buy the freehold to your home (or a share in it), it may be a better option than extending your lease. This is because:

• you would no longer have to pay ground rent or services charges
• it will probably increase the value of your home further
• you would have more control over the management of the building.

However, not all leaseholders can buy the freehold. It will only be an option if you qualify and can afford it. Flat owners can only buy a share of the freehold and have to join up with other leaseholders in the building to do this.

What happens if my 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.

Can my lease be extended?

Most flat owners have the right to extend their lease after they have owned the lease on their homes for at least two years. It is no longer necessary to have lived in the property during that time. However, some leaseholders are excluded. You may not be able to extend your lease if:

• you have a business lease
  
• your lease has already ended
  
• you have sublet your home on a lease of at least 21 years
  
• the freeholder is a charitable housing trust
  
• the lease was originally granted for less than 21 years.

If this is the case or you have been told that your lease cannot be extended for another reason, get advice. Freeholders sometimes get it wrong and may not be aware that the law has recently changed.

Even if you don't have the right to extend your lease you may still be able to buy a share of the freehold.

How do I extend the lease?

You have to start the process before your original lease ends. If you don't, you may lose the right to do so.

You also have to follow the correct legal procedure. This page only provides an introduction to the process. It's usually less complicated than buying a share of the freehold but you may still need to hire a solicitor (or licensed conveyancer) to do the legal work. The Leasehold Advisory Service has more information if you want to do it yourself. The basic steps are explained below.

Step 1 - find out who can extend your lease

Firstly, you need to find out how the building is owned and who originally granted your lease. This will help you work out how it can be extended:

• If the freeholder originally granted your lease, s/he will be able to extend it.
• If a higher leaseholder originally granted your lease, that higher leaseholder can extend it as long as her/his lease is at least 90 years longer than yours.

The contact details for the person or company who granted your lease should be included on any bills you receive for ground rent, service charges or other payments. 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 any problems, get advice.

Step 2 - give written notice

You have to send a formal written notice to the freeholder (or higher leaseholder) to start the process. This initial notice must include:

• your name and address
• evidence to show that you qualify
• the price you propose to pay
• details of the existing lease (including when it was originally granted and how much ground rent you pay)
• details of any person or company who is involved in your lease, such as a managing agent or higher leaseholder
• the deadline for a response (you have to allow at least two months).

If you want to propose changes to the existing lease, these should also be included in the notice.

Step 3 - the freeholder's response

The freeholder (or higher leaseholder) 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 can apply for a court order to extend your lease in the way you suggested. You have six months from the deadline in which to do this.

Your freeholder can normally only refuse to extend your lease if s/he wants to demolish or redevelop the property. If this is the case, the freeholder has to get a court order and you will be entitled to compensation. If the freeholder refuses to sell you the freehold for any other reason, get advice.

Step 4 - negotiation

Most freeholders will accept your right to extend your lease. However, they usually suggest amendments to the existing lease or to the changes you propose. You will probably be asked to pay a deposit. This is usually either ten per cent of the cost of extending your lease or £250 - whichever is higher. Negotiating the new lease will normally take at least two months.

Step 5 - the new lease is granted

The new lease will be for 90 years plus the number of years left on the original lease. You will not have to pay ground rent after the time left on the original lease ends. In all other ways, it will be similar to the old one unless you and the freeholder agree to change it. If you have disagreements about the new lease, get advice. You may be able to get your local leasehold valuation tribunal to sort them out.

How much will it cost?

You are likely to need a surveyor's valuation to get an idea of how much extending your lease might cost. It is almost impossible to work out a fixed price, so most surveyors will give you a high and low price. The final price should be somewhere in between. If you can't agree a price, a leasehold valuation tribunal (LVT) can set one.

You will also have to pay all the solicitors' and surveyors' fees involved - for both yourself and the freeholder - which can be quite expensive.

After your lease has been extended, you will no longer have to pay ground rent. It will probably still be mentioned in your lease but will be called a peppercorn rent, which means there is nothing to pay.

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