Leasehold house lease extension has similarities with the lease extension process for flats. However, there are key differences and there is huge importance in instructing a property lawyer with the right experience to help you achieve success as it is a niche area.



Leasehold houses are still comparatively rare in the UK property market although a considerable number of houses have been built and designated as leasehold in recent years, notably - and notoriously - under the Help to Buy scheme.

As with flats you have the right both to extend your lease and to buy your house's freehold, similarly you can take a formal statutory path or an informal one to doing so. However, you should take careful advice concerning your best individual strategy: many leasehold house owners have opted to buy their freeholds rather than extend their leases. Though this is a more expensive action and there are other factors to consider as well.



This article considers the following:

1
What legislation underpins lease extensions of leasehold houses?

2
What are the eligibility criteria for extending your lease on your leasehold house?

3
What is the leasehold house lease extension process (formal and informal)?

4
What alternatives do you have instead of extending your house's lease?

5
Ground Rent According to the Leasehold Reform Act 2022

1

What legislation underpins lease extensions of lease houses?

The Leasehold Reform Act 1967 is the main piece of legislation which enabled leasehold house owners to extend their leases and/or buy their freeholds (enfranchisement).

This Act, like many however, has been amended over the years, with notable related revisions occurring within in 1993, 2002 and 2022

2

What are the eligibility criteria for extending your lease on your leasehold house?

Please note that the following points concern residential property. When commercial buildings and leases are concerned there are many more factors and rules to consider.

The key criteria are as follows:

• You have to have been the legal owner of the house lease for at least two years immediately preceding your serving notice to your freeholder.
• The original lease granted for the house has to have been a long lease i.e. for more than 21 years.
• You can't yourself be leasing the house to a subtenant who themselves have rights (to extend or to buy) under the original 1967 Act.

Please note that there are other, sometimes complex, eligibility criteria involved, for example your rent must be classed as low rent and the house must have a rateable value below certain prescribed limits. These mean that you are highly advised to instruct a solicitor with appropriate experience to avoid any pitfalls.

You should also note that a number of types of lease are excluded from being extended, some notable examples of which are:

• Leases where the letting of the house is just an add-on to the letting of other land and premises.
• Leases granted by a charitable housing trust for the purposes of its charitable functions.
• Some shared ownership leases.
• Leases of Crown land (even though the Crown can permit buying the freehold).
• Some leases where your landlord is a local authority or other public body and the land is needed for development.

3

What is the leasehold house lease extension process (formal and informal)?

Formal Process

This process ends with you receiving a 50-year extension to your lease for no premium payable but you have to pay some of your landlord's costs and, when the original lease expires, you'll have to pay a 'modern ground rent' which will be considerably more expensive than your existing ground rent.

1 - Form 1 Tenant's Notice
You have to serve an appropriately completed and evidenced form officially known as a Form 1 Tenant's Notice (also known as a notice of tenant's claim) under of the Leasehold Reform Act.

This has to state or provide:

that you're claiming an extended lease (rather than claiming to buy the freehold)

the name and address of the person you're serving the notice on (in most cases the freeholder)

whether a copy is being served on anyone else and if so, you have to provide their name and address

your signature (or a signed covering letter) or that of your authorised agent

signatures from both joint tenants if there is a joint tenancy

details of the property such as the address, identification evidence (title plan), the (long) lease and the date on which it was acquired, details about the rent to establish eligibility re: the rent test (mentioned above) and proof that the property's value doesn't exceed the relevant rateable value limit (also mentioned previously)

There are additional rules concerning whether other relevant parties must receive the notice and governing the service of the notice itself.

Unlike the case for Section 42 leasehold extension tenants' notices (for flats), if your freeholder disputes your notice's validity, you can normally serve a second notice without any sanction/disruption to your claim.

2 Continuing process and required timelines
Now once you've served your notice, the underpinning legislation views you as having a contractual relationship with your landlord/freeholder where they have to provide you with your requested lease extension. Each step has its own timeframe to be followed - we give more tips in our article - How long does it take to extend a lease?.

Ensuing conditions are as follows:

• Your landlord can serve notice on you requiring you to prove your title to the lease and you have 21 days after you've been served this notice to respond.
• If your landlord has served a Notice in Reply or hasn't served one within 2 months of receiving your claim, you can, by further communication, require the landlord to state what changes to the terms of the existing lease it will require and what other terms it will be seeking in the new lease.
  The landlord must respond to your further notice within 4 months.
• The landlord prepares your draft new lease and, once you've received it, you must return it, with or without amendments, within 21 days; if you don't do this it's assumed that you approve of the draft.
• After this 21-day period has expired, either you or your landlord can serve notice requiring completion of the lease extension. Completion then takes place on the first working day after a period of 4 weeks from the giving of the notice has expired.
• If either you or your landlord doesn't fulfil your required obligations, either of you can serve a minimum of two months’ notice specifying the default and requiring it be made good before the expiry of the notice.

3 What costs do you have to pay?
Most importantly, you don't pay any premium for your lease extension (unlike the statutory process for a lease extension on a flat) however:

• you have to pay your landlord's legal costs for investigating your right to extend your lease;
• you have to pay for the costs of the new lease (but not the landlord's costs for negotiating its terms with you); and
• you have to pay for the valuation of the extended lease.

4 What happens when your landlord is missing or unidentifiable?
You cannot apply for a lease extension in the way described. You must apply to the county court for a vesting order.

Once you've applied to the court, your claim goes ahead even if your freeholder is subsequently identified. The county court has jurisdiction to make an order on such terms as it thinks fit, if it is satisfied about your eligibility to extend your lease (or buy the freehold).

The Residential Property division of the First-tier Tribunal (Property Chamber) in England and leasehold valuation tribunals in Wales have jurisdiction to determine any rent payable up to the date of the conveyance, which you pay to the court. The court has no power to order that your costs are set off against the amount paid into court: you have to pay the entire cost of your application.

Informal Process

There is nothing to stop you negotiating a informal lease extension on your leasehold house with your landlord, however in essence there's no legal protections. Please read Informal Process: What are the Pros and Cons to see how the two compare in the case of lease extensions for flats.

Pros

• Might prove quicker to complete than the formal process
• Might prove cheaper than the formal process
• There might be flexibility in the number of years extra you get on your lease

• Your ground rent stays at the old rate until the pre-existing lease is up, then falls to peppercorn for the 50 year extension

Cons

• Might be more costly than the formal process; unless you take professional advice you are operating 'in the dark'
• No surety at all of success
• Your new extended contract might be loaded with unfavourable clauses
• If negotiations stall, you'll lose anything you've invested in the process up to that point

4

What alternatives do you have instead of extending your house's lease?

As mentioned a number of times, if you are eligible to get a lease extension on your leasehold house then you could buy the freehold as an alternative.

The main attraction here is that you'll no longer have to pay any form of ground rent however it might be a much more expensive option than going for a lease extension. Additionally, you might find that the landlord/freeholder can still impose service charges on you because they might have the right to continue looking after the communal areas if they own the whole estate your house is built on.

5

Ground Rent According to the Leasehold Reform Act 2022

For leaseholders who extend their lease informally. the ground rent will be restricted to zero on the new term, once the pre-existing lease has expired. 

If you hold a pre-existing lease subject to the higher ground rent, you may wish to ask your freeholder about executing a deed of variation to bring your ground rent down to a reasonable level.