How does a lease extension work?

If you’re happy with your current property and would like to extend your leasehold, it’s important to consider the terms of your contract and determine when the lease runs out. Typically, your tenancy will run on a lease that has a set end date. If you’d like to stay in the property beyond this date, it’s important to look into a lease extension and learn how a lease extension works. In this article, we’re going to look at what a lease extension is and the steps you should take if you want to extend your lease.

Defining a lease

Before diving into lease extensions, it’s useful to understand the definitions of a lease. A lease is a legally enforceable agreement between a lessor - usually a landlord - and the lessee - the tenant. Leases are different from freehold properties as the interest from a lease is outlined by a specific period of time. This is usually in the form of rental payments or a lump sum payment at the start of a lease.

Leases break down the rights and obligations of the leaseholders, as well as the rights and obligations of the landlord. Leases are essentially documents that confirm your right to occupy a specific property over an established period of time, known as the term of the lease. When the term ends, the ownership of the property is handed back to the landlord, which is known as reversion.

Defining a lease extension

A lease extension is a way to extend the years of the lease so that the person leasing the property can stay there for longer. This means that ownership of the property remains with the lessee rather than the landlord. This is usually done by negotiating new terms with the landlord directly. In some cases, though, petitioning for a Section 42 Notice is required. In these instances, it’s useful to have professional legal advice to guide you through the process.

You can obtain all of the necessary information about your existing lease via the Land Registry website. It costs £3 to obtain the leasehold title and provides you with relevant information about the existing lease.

How to extend the lease

Extending a lease is usually a straightforward procedure that begins with you asking the landlord to extend the lease. This can be done at any time and doesn’t require the current lease to have ended. Generally speaking, leases are usually extended by either 90 years for flats or 50 years for houses. The overall cost of extending a lease varies depending on the property, but the Leasehold Advisory Service lease extension calculator gives you a useful estimate to determine to price.