Common Lease Extension Myths - and the Reality

Lease extensions for residential flats are an area of law surrounded by misconceptions. Many leaseholders delay taking advice based on assumptions that turn out to be inaccurate, sometimes at significant cost.

This article addresses some of the most common lease extension myths and explains the reality behind them.

Myth 1: I have plenty of years remaining on the lease 

Whilst 80 or 90 years seems like a long time in ordinary terms, a lease is generally considered to be short once it has under 90 years left to run.  

Once a lease drops below 90 years remaining, difficulties can arise in mortgaging or selling; once the lease has under 80 years remaining it can be significantly more expensive, under the current law, to buy a lease extension.  

See our further guidance Do I need to Extend My Lease? for more information. 

Myth 2: I can just sell my flat with a short lease 

Short leases can deter buyers and often lead to price reductions or delays. 

Whilst you can, of course, opt to simply sell your flat with a short lease, you may find that a short lease will adversely affect the value of the flat and may even limit you to cash buyers if mortgage lenders consider the lease to be too short.  

Myth 3: I can deal with a lease extension when I sell my flat

In practice, leaving a lease extension until a sale is underway can limit buyer interest and weaken your negotiating position with the landlord; if you have an active sale, you will often be time-pressured to accepting non-statutory lease extension terms from the landlord.

Planning ahead usually provides more flexibility and better outcomes.

See our further guidance Extending You Lease When Sellin a Flat for further information.  

Myth 4: Online calculators give a reliable estimate of the cost

Online lease extension calculators can provide very broad guidance about the range of the premium (price) you may expect to pay for the lease extension, but they do not reflect the full statutory valuation framework or the specifics of an individual flat and should not be relied upon. 

Indeed, most online calculators come with caveats and warnings about their use and that they are not a substitute for seeking specialist valuation advice. 

Relying on an online estimate can result in unrealistic expectations. A specialist lease extension valuation is essential for accurate advice.

Myth 5: Informal lease extensions are always quicker and cheaper

Informal (non-statutory) lease extensions are often presented (particularly by landlords) as a quicker and cheaper alternative. 

However, the premium put forward by the landlord may be higher than a statutory valuation, it gives the option for the landlord to offer a shorter extension of years, and allows the landlord to retain the ground rent in the existing lease.  There are no time-frames the landlords have to stick to, the landlord can withdraw without reason, and there are no limits on the landlord’s costs which are payable by you.

Informal lease extensions are often taken as an opportunity for the landlord to include new more robust service charge and other financial recovery clauses in your lease; the effect of which is more charges payable by you in the long-term.  

If you have a mortgage on your flat, informal lease extensions also require consent from your mortgage company (as the terms don’t follow a fixed statutory process) which can delay matters.  

Informal extensions can therefore be open-ended in terms of delays and costs, and the terms are controlled by the landlord.  

See our further guidance about Informal Lease Extension Offers from your Landlord for further discussion of the pros and cons of non-statutory (informal process) lease extensions. 

Myth 6: The landlord can refuse a statutory lease extension

If a leaseholder qualifies for a statutory lease extension, the landlord cannot refuse to grant it.

The statutory process gives leaseholders enforceable rights, including access to the First-tier Tribunal if agreement cannot be reached on the terms, or access to the Court for an order for the lease extension to proceed, if the landlord fails to respond to your claim.

For more information about the statutory lease extension process, see our page How the Statutory Lease Extension Process Works.   

Myth 7: Lease extensions always take years

While lease extensions can take time, many statutory lease extensions complete within anything from three to six months.

When should leaseholders take advice?

Leaseholders are best placed when they seek advice early, before lease length becomes critical or a sale is imminent.

Early advice allows options to be considered calmly and strategically.

Final thoughts - Take advice from specialist lawyers

Understanding the realities of lease extensions can help leaseholders avoid unnecessary cost and stress. Accurate advice, tailored to the specific property and circumstances, is key.