You Are a Leaseholder Wanting to Extend Your Lease
Leaseholders of flats with a long lease have a statutory right to extend their lease by 90 years (on top of the unexpired term) under the Leasehold Reform Housing and Urban Development Act 1993, as substantially reformed by the Leasehold and Freehold Reform Act 2024.
Quick Answer
Under the Leasehold Reform Housing and Urban Development Act 1993, qualifying leaseholders of flats can extend their lease by 90 years at a peppercorn rent. The premium is calculated by a statutory formula and, if not agreed, is determined by the First-tier Tribunal (Property Chamber). The Leasehold and Freehold Reform Act 2024 has made significant changes to the regime, including removing the two-year ownership requirement for new claims.
Full Explanation
The right to a statutory lease extension for flat leaseholders is contained in the Leasehold Reform Housing and Urban Development Act 1993 (LRHUDA 1993). The Act gives qualifying leaseholders the right to extend their lease by 90 years on top of the current unexpired term, at a peppercorn (nil) ground rent, in exchange for a premium paid to the freeholder.
To qualify under the original 1993 Act regime, the leaseholder had to be an individual (not a company), the original lease must have been granted for more than 21 years, and the leaseholder had to have owned the flat for at least two years. The Leasehold and Freehold Reform Act 2024 has made substantial changes: the two-year ownership requirement has been abolished for new claims, and the government has announced plans to simplify the premium calculation formula, though full implementation is phased.
The process begins with the leaseholder serving a notice of claim under LRHUDA 1993 s.42 on the freeholder. The freeholder must respond with a counter-notice within two months, either accepting the claim or proposing a higher premium. If the parties cannot agree the premium, either side may apply to the First-tier Tribunal (Property Chamber) for a determination. The statutory formula for calculating the premium considers the ground rent, the unexpired term, the deferment rate, and the relativity between the leasehold and freehold value.
A lease with fewer than 80 years unexpired attracts 'marriage value' โ an additional premium payable to the freeholder equal to 50% of the marriage value (the increase in combined freehold and leasehold value achieved by the extension). This makes extensions significantly more expensive on shorter leases and is a strong reason to extend before the lease drops below 80 years.
Note that under the Leasehold and Freehold Reform Act 2024, the government has committed to further reforms including changes to marriage value and the deferment rate, but the timing of implementation remains subject to secondary legislation. Leaseholders should take professional advice from a solicitor specialising in enfranchisement and a specialist surveyor before serving a notice of claim.
Legal Basis
- ยงLeasehold Reform Housing and Urban Development Act 1993 โ Statutory lease extension (Part I, Chapter II)
- ยงLeasehold Reform Housing and Urban Development Act 1993 s.42 โ Notice of claim
- ยงLeasehold and Freehold Reform Act 2024 โ Reforms to enfranchisement regime
- ยงCommonhold and Leasehold Reform Act 2002
What To Do
Check Eligibility
Confirm you hold a long lease (originally granted for more than 21 years), that the property is a flat, and that you are an individual (not a company). Under the LFRA 2024, the two-year ownership requirement has been removed for new claims. Check the current unexpired term โ if it is approaching 80 years, act urgently.
Instruct a Specialist Solicitor and Surveyor
Instruct a solicitor experienced in residential leasehold enfranchisement and a RICS-qualified specialist surveyor to value the premium before serving a notice. The notice of claim must specify the proposed premium โ an underestimate may prejudice negotiations.
Serve a Section 42 Notice of Claim
Your solicitor will serve the formal notice of claim under LRHUDA 1993 s.42 on the freeholder (and any intermediate landlord). The notice must contain prescribed information. Once served, it crystallises your right to the extension and the process runs on statutory timetables.
Respond to the Freeholder's Counter-Notice
The freeholder must respond within two months with a counter-notice. This will either admit the claim or propose a higher premium. Instruct your surveyor to advise on the counter-offer and, if necessary, begin negotiations.
Apply to the First-tier Tribunal if Necessary
If the parties cannot agree the premium within the statutory period, either party may apply to the First-tier Tribunal (Property Chamber) for determination. The Tribunal will assess the premium using the statutory formula.
Important Deadlines
Important Warnings
Do not allow your lease to fall below 80 years unexpired without taking advice โ marriage value kicks in at that point and can increase the cost of extension very significantly.
The notice of claim must be correctly drafted and served โ errors can be costly. Always instruct a specialist solicitor rather than attempting this yourself.
The Leasehold and Freehold Reform Act 2024 is still being implemented through secondary legislation โ always check the current position with a solicitor before serving a notice.