Perks and Pitfalls of the Statutory Lease Extension Procedure

Lease Extensions are becoming an ever more prevalent transaction in the residential property market as lenders enact increasingly stringent lease term requirements for their mortgages. Flat owners are similarly eager to preserve the value of their homes and investments and, in some cases, rid themselves of ever increasing or doubling ground rent clauses.

As a lease’s term shortens, it will become more expensive to extend it particularly once the outstanding lease term falls below 80 years. You may find that some lenders will refuse to lend against a lease with a term of less than 80 years. Generally speaking, a lease under 80 years becomes less marketable partly because lenders are not keen on providing mortgages for leases with fewer than 70 or 80 years left to run due to the diminution in value of the leasehold interest.

A Statutory Lease Extension can be claimed by flat owners once they have owned the flat for more than two years and guarantees a 90 year extension to the existing term of the lease. It also effects an immediate reduction of ground rent to £0.00 from completion of the extension until the end of the newly extended term.

The process is certainly a more lengthy and complex than simply attempting to voluntarily negotiate lease terms with the landlord however in voluntary negotiations the landlord is free to demand any extortionate price for extending the lease and/or onerous additional lease terms. Either party can also withdraw from the lease extension process at any time and without penalty, often leaving the remaining party with wasted legal and surveyor’s costs.

In a Statutory Lease Extension, the landlord must be reasonable in the price they can demand for extending the lease. They also are not permitted to add any further terms or obligations to the lease unless agreed by both parties and can only made appropriate amendments to modernise ancient lease terms. The Landlord may only refuse a lease extension on very specific grounds which are not likely to arise (for instance, if the landlord is intending to redevelop the property and the remaining term of your lease is less than five years from the date of your initial lease extension claim).

Both parties must also adhere to a strict statutory timetable including timely responses to correspondence from the other party’s solicitors. The process can still take up to 18 months to conclude and is rarely settled before 6. Statutory Lease Extensions usually settle 10-12 months after the initial claim is made. If the claim is not settled by this time an application must be made to the First-tier Tribunal for determination by hearing.

The Statutory Lease Extension procedure is briefly as follows:

  • The Tenant must obtain an expert valuation of the lease premium for the statutorily extended lease.
  • A Notice of Claim is then served upon the Landlord (and any other relevant parties). At any time after receipt of this Notice the Landlord is entitled to request a 10% deposit of the sum offered by the Tenant.
  • The Landlord has two months from service of the Notice of Claim to serve a Counter Notice in which they will either accept the terms offered or (as is more often the case) counter-offer terms.
  • If a Counter Notice is served, the parties have 6 months from the date of service of the Counter Notice to reach a settlement as to the terms of the new lease. If terms are not agreed the Tenant must make an application to the First-tier Tribunal for determination by a Tribunal hearing.
  • Once terms (and the form of the lease) are agreed, the leases are signed up by both Landlord and Tenant. The Landlord and Tenant will proceed to complete the new lease with the Tenant paying the agreed upon premium to the Landlord in consideration of the extended lease.

For further information including potential costs please contact one of our Lease Extensions specialists.


Lease Extensions are becoming an ever more prevalent transaction in the residential property market as lenders enact increasingly stringent lease term requirements for their mortgages.