Is extending a residential leasehold a good idea?

Many people don’t realise that when you buy a flat that is a leasehold rather than a freehold, you don’t actually own the property – you are really agreeing an amount of time with the freeholder to live on the ground they own. This was normally around 100 years, but eventually the lease will expire and where does this leave you if you own a property with a short lease?

You really have two options here – the first is to negotiate terms with the freeholder to discuss extending your residential leasehold agreement with them and to renew it back to 125 years. Your second option is to try to purchase the freehold from them, but this leaves you with some challenges. We will focus on renewing your lease.

How to approach the landlord

So, how should you approach your landlord to renegotiate your lease? Interestingly, 80 years is seen as a short lease and this may mean that your property becomes very difficult to sell. In addition, the cost of renegotiating a lease that is less than 80 years is much more expensive as the freeholder will seek to recoup some of the increase in the value of the property thanks to the extending of the residential leasehold. Therefore, it is in your best interests to be aware of how long is left on your lease and to start renegotiation of this as early as possible.

Try to speak informally to your landlord to start with. This will help you to get off on the right foot and keep things non-confrontational. You do not want this to be a difficult process so tread carefully. By taking this approach and reaching agreement, you will save a large amount of money so it is well worth a try.

How to start the process

You can start the process by serving your landlord with a Tenant’s Notice. This outlines the price you are willing to pay for the lease extension. You should not take this step without first getting advice on the value of the land and the property as this will drive the amount you will offer. Your landlord may ask you for your title to the flat and how long you have owned the property.

Your landlord will then serve you with a Counter-Notice (within a minimum of two months). This will either agree to your terms and renew the lease, make a counter offer or not admit your right to renew. In this case, you will have to go to court for a final decision.

You should fully explore your rights and those of your landlord before you embark on the process of extending a residential leasehold– any failure to meet deadlines or if you overlook any serious issues, you may face a very serious situation.

If you would like advice about how to renegotiate a lease or if you are a landlord and are being asked to renegotiate, our experienced commercial property team can help. You can get in touch by calling 020 7490 5861 or email us at and we will be in touch soon.