Should I extend my lease?

What does extending the lease actually mean?

Your leasehold has a certain term or length (such as 85 years), at the end of which the property will revert to the freeholder. It is a totally unfair relic of feudal laws, which you can avoid by adding extra years to the length of your lease – that is, extending your lease.

Should I extend my lease?

Before you enter the costly legal process of a lease extension, you need to decide whether it is worth the effort and expense. As a general rule of thumb, if the lease is less than 90 years you should almost certainly try to extend it because:

Why would I not want to extend the lease?

Depending on your circumstances, it might not be worth getting involved in the expense and hassle of extending your lease if:

If you do want to extend – act quickly!

As the lease gets shorter, the cost of extending it gets more expensive at an exponential rate. This is particularly true for leases of less than 80 years, where the cost of lease extension really starts to bite.

At about 60 years, the cost of extending the lease increases by about 1% of the value of the property each year – i.e. if the property is worth £250,000, the bill for extending the lease will go up about £2,500 a year. When the leasehold gets down to zero years, it is practically valueless as the whole property reverts to the freeholder (though for a certain period after expiry of the lease you may still have a right to extend the lease).

So, if the term of your lease is less than 80 years, you should act as quickly as possible before it gets too expensive. And if your lease is less than 90 years, you should act quick enough to ensure you don’t end up with a lease of 80 years!

Am I allowed to extend my lease?

Yes – if you’ve owned the property for at least two years you are entitled to demand a 90 year extension to be added to your existing lease from your freeholder. You only have to have owned the property, so you can still apply if you’ve been living somewhere else. If you have owned the property for less than two years then:

If none of this applies – you simply have to wait two years.