Lease Extensions – Advice for Leaseholders


Not so long ago, the necessity to obtain a lease extension, whenever a lease was nearing 80 years or so unexpired, was not always that well understood. Due to much greater publicity and wider awareness of this problem, most leaseholders are now anxious to extend their residential leases at the earliest available opportunity.

So what are the options? Generally there are two possibilities, either an informal lease, or a statutory lease granted under the Leasehold Reform, Housing & Urban Development Act 1993. To help you understand the subtle differences, please read on –

An informal lease constitutes an agreement for the lease to be extended for an agreed period by the parties. It often takes the form of a new 99-year lease or possibly a new 125-year lease. Invariably the new lease will provide for the lessee to pay a modern ground rent.

Leaseholders will often without obtaining formal valuation advice from a chartered surveyor take it upon themselves, to make the initial contact with the freeholder or their agent to enquire what terms are available. These enquiries often lead to the freeholder making a proposal to the leaseholder with respect to the length of the new term, the premium (the price) and the new ground rent.

All too frequently leaseholders perceive the informal terms offered to be unreasonable, or they may simply be unsure as to whether the offer is fair. We are very happy to discuss with you (without any obligation) whether such an offer you have received, can be considered to be reasonable and whether you should proceed. We don’t charge for giving this initial advice, so feel free to contact us on 0207 125 0499 to discuss.

A statutory lease, on the other hand, is for a specific extra term of 90 years, which is added to the term remaining at the time the lease extension claim is made. With this lease the ground rent reverts to zero, or what is commonly called a peppercorn. It would be fair to say that most landlords are unprepared to grant a lease upon these terms unless compelled to do so. To claim such a lease the statutory procedures must be commenced by serving a formal Notice of Claim upon the landlord, known as a Section 42 Notice, served under the provisions of the Leasehold Reform, Housing & Urban Development Act 1993 (as amended by the Housing Act 1996 and the Commonhold & Leasehold Reform Act 2002).

Whether you decide to proceed for a formal or informal lease, it is important to act as soon as possible. This is because as time progresses the landlord’s interest will escalate in value, whilst the leaseholders interest will fall in value. Moreover any increase in value due to property price inflation, will as the lease shortens have to be shared disproportionably in the landlord’s favour.

The Solution

At Mike Stapleton & Co, we have been actively involved in negotiating lease extensions since 1993 and on a daily basis negotiate terms for both informal and formal leases. For many clients a casual call to our office has lead to them saving thousands of pounds.

Over the years we have settled countless cases, many involving highly contentious disputes with large powerful landlords such as the Freshwater group, Sinclair Gardens, Regis and the Church Commissioners, just to name a few.

If you do decide to proceed for a formal lease and in the unlikely event that an amicable settlement cannot be reached, we will happily represent you at the First-Tier Tribunal (Leasehold Valuation Tribunal), who in the absence of agreement will determine the price to be paid. We have a wealth of experience in representing clients at the First-Tier Tribunal and will be more than pleased to make copies of previous decisions available to prospective clients.

Our geographical area of coverage extends throughout central and outer London and the entire Home Counties.

Contact Mike Stapleton & Co.

For a free informal chat about your lease extension or any other matter call Mike Stapleton FRICS on 0207 125 0499 or feel free to fill in the form on this page and we will get back to you as soon as possible.