Here at Littlefairs Property Company we know only too well the price you can end up paying if you don’t extend your property’s lease early enough.


A guide to lease extensions

A thorough guide to extending a lease is set out in the Leasehold Reform, Housing and Urban Development Act. The new measures announced by the housing secretary, Robert Jenrick, on 7thJanuary 2021 is the biggest reform to English property law for over 40 years.  The reforms have been designed to make home ownership fairer and more secure.  Leaseholders will be offered the right to extend their lease by a maximum term of 990 years at zero ground rent.

Historically, leaseholders had the right to extend their lease under the Leasehold Reform, Housing and Urban Development Act which entitled them to a 90 year extension on top of the number of years remaining on their existing lease. The main qualifying criteria are that leaseholders must have owned the property for more than two years, and must have a ‘long lease’, e.g. one originally granted for 21 years or more.  If they didn’t qualify, leaseholders of houses could only extend their lease for 50 years with a ground rent.

The new reforms have meant that any leaseholder who opts to extend their lease on their home will no longer pay any ground rent to the freeholder. This could save leaseholders thousands of pounds. A cap will also be introduced on ground rent payable when a leaseholder chooses to either extend their lease or become the freeholder.


Marriage Value – the 80 year trap now scraped

Historically, should leaseholders have wanted to extend their lease the longer they left it, the more expensive it would be.  Once the remaining term reaches 80 years, there could have been a significant increase, because it’s at this point that an additional ‘Marriage Fee’ is payable on top of all the other costs.  The government have now scrapped this prohibitive cost and set the calculation rates to ensure this is fairer, cheaper and more transparent.


Transparent fee structure is the way forward

The government has previously committed to restricting ground rents to zero for new leases to make the process fairer for leaseholders. This will also now apply to retirement leasehold properties. Consequently, purchasers of these homes have the same rights as other homeowners and are protected from uncertain and rip-off practices.  Leaseholders will also be able to voluntarily agree to a restriction on future development of their property to avoid paying ‘development value’.

Scott Littlefair, Managing Director at Littlefairs Property Company commented, “The issue of escalating ground rent on leasehold homes has been a long-term scandal which has left many owners trapped and unable to sell their houses.”

Research by NAEA Propertymark, ‘Leasehold: a Life Sentence’, carried out in 2018, found that 46% of leasehold house owners were unaware of the escalating ground rent when they purchased their property.

Scott continued: “Over one million households in the UK are sold through a leasehold, and this new legislation will go a long way to help thousands of homeowners caught in a leasehold trap.”

Legislation will be brought forward in the upcoming session of Parliament, to set future ground rents to zero.


Lease Extension procedure under the 1993 Leasehold reform Act

You should be aware that you are responsible for reasonable costs incurred by the freeholder during this process. These costs are likely to include valuation fees and legal fees in addition to your own valuation and legal fees.

The first stage in the process is for you to instruct a surveyor to carry out a valuation under the 1993 Act.

Loosely speaking, the cost of extending, also known as the premium, is calculated based on what the landlord stands to lose by granting the lease extension. Your surveyor will calculate your ‘opening offer premium’ in order for your solicitor to serve a Section 42 Notice on the landlord, which starts the formal proceedings.  The extension process can either be undertaken formally or informally based on your circumstances.

If you think you should be extending your lease and would like to know how Littlefairs can help, or require a lease extension valuation please contact Scott Littlefair on 01904 393989 or


Written 8thJanuary 2021