Lease extension for special situations

A short lease, which is a lease with less than 80 years, can make a property harder to sell or remortgage. This is because a short lease is a depreciating asset, meaning it loses value over time. In many cases, extending the lease can be a financially sensible decision.

If you’re selling, you can start the formal lease extension process yourself and assign the claim to the buyer when you sell. This allows the buyer to complete the extension immediately after they buy the property.

You can do this by serving a Section 42 notice before the sale and including the notice in the sale documents.

If you’re buying a flat with a short lease, check whether:

• the seller has already served a Section 42 notice (you can take over the claim)
• the seller or freeholder is willing to negotiate an informal extension before completion

Always ask your solicitor to confirm these details before you exchange contracts.

If you inherit a leasehold flat, you take on the rights and responsibilities of the owner.

Under the Leasehold and Freehold Reform Act 2024, the 2-year ownership requirement has been abolished. This means that either the personal representatives can start the claim while the property is still in the estate, or you can start the claim immediately as soon as the property is transferred into your name.

If you’ve made every reasonable effort to find your landlord but cannot locate them, you can still extend your lease.

You’ll need to apply to the county court for an order that allows you to extend the lease, called a vesting order, under Section 50 of the 1993 Act.

If the court is satisfied that you qualify for a lease extension, it can grant the new lease on your landlord’s behalf. The court will normally ask the First-tier Tribunal (Property Chamber) in England, or the Leasehold Valuation Tribunal in Wales, to decide the premium (price) you must pay.

You’ll still need a professional valuation for this process.

You can use the Leasehold 9 application form in England, or application form LVT13 in Wales, to apply to the tribunal for a decision on the price if your landlord is missing.

If your landlord receives your Section 42 notice but does not reply with a counter-notice by the deadline, you can also apply to the county court for a vesting order. The court can then grant the lease directly to you on the terms set out in your tenant’s notice.

You must apply within 6 months of the counter-notice deadline.

If you own a share of the freehold with other leaseholders, you might not need to use the formal process.

You and the other freeholders can agree informally to grant yourselves longer leases at minimal cost, provided all parties consent.

However, you should still take professional legal advice to ensure that:

• the new leases are correctly drafted
• the terms are consistent between all flats
• the transaction is properly registered with the Land Registry

If you cannot agree with the other freeholders, you may still be able to extend your lease under the formal process.

You cannot start a lease extension claim while a collective enfranchisement (buying the freehold together) is in progress. If one begins after you have applied, your lease extension will be paused until the process of buying the freehold has finished.

Your landlord can refuse to grant a new lease if they can prove to the court that they intend to demolish or redevelop the building.

This applies only if your lease has less than 5 years remaining at the date you serve your Section 42 notice.

To exercise this right, the landlord must:

• show genuine redevelopment plans
• get any necessary planning permission
• pay you compensation equal to the full market value of your flat (as if your lease had not been extended – so the flat’s market value in its current state)

Your landlord also has the right to terminate a formally extended lease under the same conditions, paying you compensation, if they intend to demolish or redevelop the building.

Sometimes there is more than one landlord – for example, a headlease to a management company and subleases to individual flats.

In this case, the competent landlord is the one whose lease is long enough to grant you a 90-year extension.

The overall premium you pay is divided between all landlords based on how their interests are affected.

If you are unsure who the competent landlord is, your solicitor can check this using Land Registry records or by serving an information notice under Section 41 of the Act.

You can extend each lease separately or as part of a collective enfranchisement (buying the freehold with other leaseholders).

If the leases have different expiry dates, the premium will vary for each flat.

You may want to take valuation advice on whether to extend individually or buy the freehold together.

A Tyneside lease (also known as a criss-cross lease or crossover lease) is a type of property ownership where a house is divided into 2 flats, and the leaseholder of each flat owns the freehold of the other flat.

If you have a Tyneside lease you have the usual rights to extend your lease through the formal route under the Leasehold Reform, Housing and Urban Development Act 1993.

However, it may be easier and cheaper to extend the lease through the informal route by agreement with the other flat owner. You could both agree to extend each other’s lease for whatever length you choose at no cost, and split the legal fees between you.

There may be tax implications when extending your lease in this way, so you should get specialist tax advice first.

If you decide to sell your flat after serving a Section 42 notice, you can transfer your lease extension claim to the buyer (assigning the benefit).

This means that the buyer can step straight into your claim and complete the extension. This can help where few years remain and buyers may otherwise struggle to get a mortgage.

If a leaseholder dies before starting a claim, their personal representatives (executors or administrators), who are the people responsible for managing the estate, can start a lease extension claim immediately.

Following the changes in the Leasehold and Freehold Reform Act 2024 (effective from 31 January 2025), personal representatives no longer need to prove the deceased owned the property for 2 years. They can simply serve the notice in their capacity as the current legal owners of the lease.