There are two main ways to extend the lease on a flat. A formal, or statutory, lease extension uses rights under the Leasehold Reform, Housing and Urban Development Act 1993. Under the current process, a qualifying leaseholder can add 90 years to the existing term and reduce the ground rent to a peppercorn, meaning no monetary rent is payable.
An informal, or voluntary, lease extension is negotiated directly with the freeholder. The length of the new term, ground rent and premium are agreed between the parties. Both routes can be useful, but they offer different levels of certainty, protection and flexibility.
The formal statutory lease extension explained
A formal lease extension follows the statutory process set out in the Leasehold Reform, Housing and Urban Development Act 1993. It is available to qualifying leaseholders of flats, subject to the relevant legal criteria.
The current statutory route adds 90 years to the remaining lease term. The new lease is granted at a peppercorn ground rent, so the existing ground rent is removed.
A valid statutory claim gives the qualifying leaseholder a legal right to a lease extension. The freeholder cannot refuse the claim simply because they do not wish to extend the lease, although the premium and detailed terms may still need to be agreed.
The statutory framework sets out a process for notices, responses and negotiations. If the parties cannot agree the premium or relevant lease terms, either party may be able to apply to the First-tier Tribunal, Property Chamber, for a determination.
The previous requirement to have owned the flat for two years was removed on 31 January 2025. A leaseholder can now begin a statutory claim once they are registered as the owner, provided the other qualifying criteria are met.
A statutory lease extension still involves a premium, legal work and valuation advice. Under the current process, the leaseholder will usually pay their own reasonable legal and valuation costs as well as the freeholder’s reasonable costs associated with the claim.
The informal voluntary lease extension explained
An informal lease extension is agreed directly with the freeholder outside the statutory process. It is sometimes described as a voluntary extension because neither party is following the prescribed statutory route.
This approach can offer flexibility. A cooperative freeholder may be willing to agree terms without the formal notice procedure, which can sometimes make the process shorter. The term added to the lease, the premium and the ground rent are matters for negotiation.
That flexibility can also create uncertainty. A freeholder is not required to offer an informal extension and may propose a shorter additional term than the statutory route would provide. There is also no right to ask the First-tier Tribunal to determine the premium or lease terms if negotiations break down.
Ground rent requires particularly careful consideration. An informal offer may retain the existing ground rent or introduce a revised rent that increases over time. This can affect the future marketability of the flat and may be relevant to a future buyer or lender.
An informal offer should therefore be assessed in full rather than judged on the premium alone. A lower upfront figure may not provide the same long term benefit as a statutory extension with a peppercorn ground rent.
Informal vs formal, side by side
The choice depends on the lease terms, the freeholder’s approach and the leaseholder’s priorities.
| Feature | Formal statutory route | Informal voluntary route |
|---|---|---|
| Term added | 90 years on top of the existing term under the current process | Negotiable and may be less |
| Ground rent | Reduced to a peppercorn | Negotiable and may remain or rise |
| Can the freeholder refuse? | Not where a valid claim is made by a qualifying leaseholder | Yes |
| Tribunal recourse if there is no agreement | Yes, subject to the statutory process | No statutory route to determine terms |
| Typical speed | Often around 6-12 months | May be quicker but depends on the freeholder |
| Certainty of outcome | Higher because the key lease terms are prescribed | Lower because terms depend on negotiation |
| Costs | Premium, legal and valuation costs, plus the freeholder’s reasonable costs under the current process | Premium and professional costs, subject to the terms agreed |
The statutory route gives a defined outcome. An informal route can be useful where the terms are favourable, but the offer should be compared carefully with the rights available through a formal claim.
For further information on timescales, read how long a lease extension takes.
Should you wait for the leasehold reforms?
The Leasehold and Freehold Reform Act 2024 includes significant proposed changes to the statutory lease extension process. These include a standard 990 year extension at a peppercorn ground rent, a revised valuation method and removal of marriage value.
However, these reforms are not yet in force. The government is consulting on valuation rates and has stated that it must address issues in the 2024 Act through further primary legislation before the new enfranchisement provisions can be commenced. The consultation closes on 21 October 2026.
This means the current statutory process continues to apply. For qualifying flat leaseholders, that usually means a 90 year extension at a peppercorn ground rent, with the premium assessed under the existing statutory valuation approach.
Marriage value can still apply where the unexpired lease term is below 80 years. It represents part of the additional value created when a short lease is extended. As the lease becomes shorter, the premium may increase. The proposed removal of marriage value is not yet effective.
Whether to proceed now or wait for reform is a decision that depends on the individual lease, remaining term, proposed sale plans and the terms offered by the freeholder. Legal advice should be obtained on eligibility and procedure. An independent valuation can help clarify the financial position under the current rules.
Which route is right for you?
A formal lease extension may be more suitable where the term is near or below 80 years, the freeholder is unresponsive or the leaseholder wants the certainty of a peppercorn ground rent. It may also be preferable where a sale is likely, although legal advice is needed on the implications for a particular transaction.
An informal route may be worth considering where the freeholder is cooperative, the lease is comfortably above 80 years and the proposed terms are favourable. A long extension with a peppercorn ground rent may compare well with the statutory position.
The proposed term, ground rent, premium, professional costs and long term effect on value should all be considered before choosing a route.
Brian Gale Surveyors provides independent lease extension valuation advice for statutory and informal negotiations. The valuation can assess the premium under the applicable method and provide evidence to support discussions with the freeholder.
Valuation advice is provided across Surrey, Sussex, Kent, London and the wider South East. Our role is to provide an independent opinion on value, not to draft notices or provide legal advice. A solicitor should advise on the legal terms and the most appropriate route for a specific claim.
For a closer look at valuation methodology, read how the premium is calculated. A leasehold valuation may also be useful where a short lease is affecting a sale, negotiation or other property decision.
To discuss the valuation element of a proposed extension, get a lease extension valuation.
Frequently asked questions
- What is the difference between a formal and informal lease extension?
A formal lease extension uses statutory rights under the Leasehold Reform, Housing and Urban Development Act 1993. Under the current process, it adds 90 years to the lease and reduces ground rent to a peppercorn.
An informal lease extension is agreed directly with the freeholder. Its term, premium and ground rent are negotiable, so it can be flexible but does not offer the same statutory protections.
- Is an informal lease extension a good idea?
It can be suitable where the freeholder is cooperative and offers a long term with a peppercorn ground rent. The proposed premium and lease terms should still be assessed carefully.
The main risk is accepting a shorter extension or a ground rent that remains or rises. This may affect the flat’s future saleability or mortgageability, so the informal offer should be compared with the statutory position.
- Which is cheaper, a formal or informal lease extension?
The lower upfront premium does not always represent the better overall deal. An informal agreement may appear less expensive but provide fewer additional years or retain a ground rent liability.
A statutory extension gives a defined term and peppercorn ground rent under the current rules. An independent valuation can help compare the financial effect of the two routes.
- Should I wait for the leasehold reforms before extending?
Most of the larger reforms under the Leasehold and Freehold Reform Act 2024 are not yet in force. This includes the proposed 990 year lease extension and removal of marriage value. The government is consulting on valuation rates until 21 October 2026 and has not confirmed a commencement date for the new enfranchisement arrangements.
Marriage value can still apply under the current system where a lease has fewer than 80 years remaining. Leaseholders near that point may wish to obtain valuation and legal advice before deciding whether to wait.
- Do I still need to have owned my flat for two years to extend?
No. The two year ownership requirement for statutory lease extension claims was removed on 31 January 2025.
Other legal requirements still apply. A solicitor can advise whether a particular leaseholder and property qualify for a statutory claim.
