Last updated: 28 July 2025
Most flats in the UK are sold as leasehold. If you own a flat, you likely have a lease – a contractual agreement between you, the leaseholder, and your landlord (or freeholder). This lease gives you conditional ownership of the property for a fixed period, known as the term.
The contents of the lease will also agree the leaseholder conditions and obligations such as payment of ground rent and maintenance costs and what the landlord must also be responsible for, such as property maintenance.
Over time, as the lease term decreases, the value of your property can diminish, affecting its marketability and your ability to remortgage.
However, if you’re eligible, you have a legal right to an extension of your lease. This is known as a statutory lease extension.
In this guide, we’ll explain exactly what a statutory lease extension is, the process involved, the benefits of a formal route over an informal one, and what you need to know before starting.
Why Extend Your Lease?
A lease is a diminishing asset – the fewer years remaining, the less your property is worth. If your lease drops below 80 years, the cost of extending it rises sharply due to something called marriage value, and many lenders may refuse to offer a mortgage on such properties.
Even if you’re not planning to sell, a shorter lease can significantly impact your ability to remortgage or release equity. Extending your lease early, ideally before it dips below 80 years, is almost always the financially smarter decision.
What Is a Statutory Lease Extension?
A statutory lease extension is a legal right first established under the Leasehold Reform, Housing and Urban Development Act 1993. This legislation gave qualifying leaseholders of flats the right to extend their lease by 90 years and reduce their ground rent to a peppercorn (essentially zero).
For instance, if your lease currently has 80 years remaining, a statutory extension would increase it to 170 years, significantly enhancing the property’s value and appeal.
More recently, the Leasehold and Freehold Reform Act 2024, which became law on 24 May 2024, introduced a series of updates to make the lease extension process more accessible, transparent, and cost-effective. This new legislation builds upon the 1993 Act and introduces reforms such as the removal of the two-year ownership rule, with further changes expected to come into force over time.
Together, these Acts form the foundation of the statutory lease extension process and aim to provide stronger rights and protections for leaseholders.
The Statutory Lease Extension Process
There are two main routes to extending your lease:
1. Voluntary (Informal) Lease Extension
This involves negotiating directly with your freeholder without relying on your legal rights. It can be quicker and potentially cheaper upfront, especially if you have a good relationship with the landlord. However, there are key risks:
- The landlord could offer a short extension (e.g. 20–30 years) rather than the full 90.
- Ground rent might not be reduced – in fact, it could increase.
- There’s no legal protection if the landlord withdraws or delays.
2. Statutory (Formal) Lease Extension
The statutory lease extension process offers legal protection and certainty. You must serve a formal notice (a Section 42 Notice) on your landlord, proposing the extension and a premium.
Step-by-Step Breakdown:
- Eligibility Check: You must have owned the flat for at least two years, and it must have been originally leased for more than 21 years.
- Valuation: Hire a specialist surveyor to determine the premium – the amount payable to the landlord for the extension.
- Serve Section 42 Notice: Your solicitor serves this notice to the landlord, stating your offer and terms.
- Landlord Response: The landlord must respond within two months via a counter-notice. They may accept or dispute your right or premium.
- Negotiation / Tribunal: If terms aren’t agreed within six months, either party can apply to the First Tier Tribunal (Property Chamber).
- Lease Drafting & Completion: Once agreed, your solicitor and the landlord’s solicitor finalise the extension.
You will be responsible for the landlord’s reasonable legal and valuation fees, in addition to your own.
Who Qualifies for a Statutory Lease Extension?
Not everyone qualifies for a statutory lease extension, but the good news is you don’t need to have lived in the property – you just need to own it in your name. There are a few key conditions you’ll need to meet to get started with the formal lease extension process…
Qualifying Criteria
To qualify for a statutory lease extension:
- The lease must be a long lease: It must have originally been granted for a term of more than 21 years.
- It must be a residential lease: Commercial leases are not covered.
- The landlord must not be a charitable housing trust: Some charitable landlords are exempt from the legislation.
- The lease must not be tied to your employment: If the lease is provided as part of your job, it may not qualify.
If the seller has already served a Section 42 notice before selling, you can also inherit the benefit of that notice as the new owner, avoiding the need to restart the process.
NOTE: As of 31 January 2025, the two-year ownership requirement was abolished following changes introduced by the Leasehold and Freehold Reform Act 2024. This means you no longer have to wait two years after purchasing a short lease flat before applying. Leaseholders can now begin the statutory lease extension process immediately after purchasing a qualifying property.
Costs Involved in a Leasehold Extension
The cost of a statutory lease extension includes:
- Premium: The price paid to the freeholder, based on the remaining lease term, ground rent, and property value.
- Marriage Value: Payable if your lease is under 80 years – representing the property value increase once extended.
- Legal & Surveyor Fees: Both your own and the landlord’s.
- Deposit: Often 10% of the proposed premium, payable within 14 days after notice is served.
Top Tip: Extending your lease before it drops below 80 years avoids marriage value and can save thousands of pounds.
Statutory Lease Extensions and Ground Rent – What Happens?
Under the statutory route, the ground rent is reduced to ‘peppercorn’ (a very low amount, practically zero) for the entire duration of the new lease. This is a small, symbolic rent amount that is sometimes as little as £1.
This is a huge long-term saving and a key advantage over informal extensions, where ground rent may continue or increase.
Can I Sell or Buy During the Lease Extension Process?
Yes, and recent changes to the law have made the process easier. If you’re selling after serving the Section 42 Notice, your solicitor must assign the benefit of the notice to the buyer before completion. This allows the buyer to carry on with the lease extension process without needing to start again.
If you’re buying a leasehold flat, there’s no longer a need to wait two years before starting the statutory lease extension. Since 31 January 2025, the rules have changed, and you can begin the process straight away after purchase. If the seller has already started the extension, make sure the notice is assigned to you before completion.
If you’re thinking about or in the process of buying a property with a short lease, check out our guide on things to consider when buying a flat with a short lease for more advice on what to watch out for and how lease length can impact your purchase.
What Are the Benefits of a Statutory Lease Extension?
Whilst the statutory lease extension process might take between four months to a year to complete and may be more costly upfront, you have more capacity to negotiate the extension price.
Choosing a statutory lease extension offers a number of long-term benefits for leaseholders:
- A longer lease term: You gain an additional 90 years on top of your existing lease.
- Zero ground rent: The amount of ground rent payable for the duration of the extended lease will be reduced to ‘peppercorn’ – essentially zero.
- Legal protection: The process is clearly defined in law, reducing the risk of disputes or unfair terms.
- Greater resale value: A longer lease with no ground rent makes your property more attractive to future buyers.
- Better mortgage prospects: Most lenders prefer (and often require) longer leases with minimal ground rent.
These advantages can offer significant financial and practical value, especially compared to informal lease extensions where terms may be less favourable.
Statutory vs Informal Lease Extensions – Which Is Better?
| Feature | Statutory Lease Extension | Voluntary Lease Extension |
| Lease term added | 90 years | Varies |
| Ground rent | Reduced to ‘peppercorn’ (essentially zero) | May remain or increase |
| Legal protection | Yes | No |
| Timegrame | 4-12 months | Often quicker |
| Cost certainty | Valued by formula | Negotiated |
While informal extensions may appear more convenient, the statutory route offers far greater security, fairness, and long-term savings.
Which is the best option to extend my lease?
The statutory lease extension process typically offers more consistent long-term value, legal protection, and buyer appeal. While the informal route may sometimes appear quicker or cheaper upfront, the statutory option usually delivers clearer and more reliable outcomes.
Here’s why the statutory route is often the better option:
- The lease is extended by 90 years, offering long-term security.
- Ground rent is essentially zero, saving you money over the life of the lease.
- You’re legally protected – if a dispute arises, you can take the matter to a property tribunal.
- It can increase your property’s value and mortgageability.
- Your property becomes more appealing to buyers, especially those relying on mortgages.
- If you’re purchasing a leasehold property, you can ask the seller to begin the statutory lease extension process so it’s in motion before completion.
- You can avoid excessive informal costs or clauses
What Else Should I Know?
Evidence of Title
The landlord may request evidence of your title to the property. This must be provided within 21 days of the request.
Lease Drafting
The landlord’s solicitor will draft the new lease extension deed. Your solicitor will then need to negotiate any necessary revisions – it’s vital to have legal guidance throughout this whole process due to strict statutory deadlines.
Deposit
You may need to pay a deposit. The landlord may request a deposit of 10% of the premium proposed in your notice once your notice has been served and this has to be paid within 14 days of the request.
Disclaimer: The Leasehold and Freehold Reform Act 2024 was enacted on 24 May 2024 and introduces major changes to the statutory lease extension process. While some changes, such as the removal of the two-year ownership requirement, may be in effect as of the date of this article, many other provisions of the Act may not yet be in force – with some not expected to take effect until at least 2026. Always seek independent legal advice to understand how the latest rules apply to your situation.
