Guide
Statutory vs informal lease extension: which route to take
Updated
There are two ways to end up with a longer lease, and the cheaper one on day one is not always the cheaper one over the life of the lease.
The two routes
The statutory route is the procedure in the Leasehold Reform, Housing and Urban Development Act 1993 (legislation.gov.uk). A qualifying leaseholder serves a notice, the landlord serves a counter notice, the premium and terms are agreed or determined, and a new lease is granted. Gov.uk states that a qualifying leaseholder may be able to extend by 90 years on a flat, or 50 years on a house (gov.uk).
The informal route is simply a deal. Gov.uk notes you can ask the landlord to extend the lease at any time. There is no prescribed procedure, no statutory basis for the premium, and no statutory protection about the terms of the new lease. Whatever the two of you agree is what you get.
How they differ on the things that cost money
| Point | Statutory route | Informal route |
|---|---|---|
| Procedure | Prescribed by the 1993 Act, with notices and time limits | None. It proceeds at whatever pace the parties allow |
| How the premium is fixed | On the statutory valuation basis, and determinable by the tribunal if not agreed | Whatever the landlord asks and you accept. There is no statutory basis and no tribunal to determine it |
| If you cannot agree | The tribunal can determine the premium and the terms | There is no route. The negotiation simply fails |
| The landlord's costs | The tenant is liable for the landlord's reasonable costs under section 60, subject to the limits in that section | A matter of agreement. Often the landlord requires their costs to be paid, but nothing constrains what is asked |
| The terms of the new lease | Governed by the Act rather than freely rewritten | Open to renegotiation, which can favour either side. Read what is being changed, not only the term and the rent |
| Speed | Structured, with steps that have to be taken in order | Can be quicker where the landlord is willing, and can also stall indefinitely |
Where informal deals go wrong
- A shorter extension than the statutory one. Adding a modest number of years can leave you back in the same position sooner than you expect, paying again.
- A ground rent that continues, or rises. An informal lease can carry a rent review that materially affects value and saleability. Check what the rent does over the whole term, not just at the start.
- Other terms altered alongside the extension, which is easy to miss when attention is on the premium.
- No fallback. If the landlord withdraws or raises the figure, an informal negotiation has no mechanism to resolve it. A statutory claim does.
How to decide
- Get the valuation first. Without it there is nothing to compare an informal offer against.
- Compare the whole package: term added, what happens to the ground rent, and any other changes to the lease.
- Ask a solicitor to price both routes for you, including the landlord's costs on the statutory route.
- Treat an informal offer that must be accepted quickly with particular care, and have it reviewed before you agree to anything.
Qualifying conditions, the valuation basis and costs liability are all areas the Leasehold and Freehold Reform Act 2024 addresses, and its provisions do not all commence at the same time. Do not rely on any general description of the statutory route, including this one, without checking current gov.uk guidance and taking advice on your own lease.