Statutory vs Voluntary Lease Extensions

If you own a leasehold property, extending your lease can be essential to protect its value and make it easier to sell or remortgage. There are two main routes available: a statutory lease extension (formal) and a voluntary (informal) lease extension. Understanding the difference is key to choosing the right option for your circumstances. 

What Is a Statutory Lease Extension? 

A statutory lease extension is a formal legal process that gives qualifying leaseholders the right to extend their lease under the Leasehold Reform, Housing and Urban Development Act 1993. 

Under this process, you are entitled to: 

• An additional 90 years added to your existing lease  
• A reduction of ground rent to a peppercorn (effectively £0)  
• A structured legal process with clear timelines and protections  

Because this route is set out in law, it provides certainty and protection, even if the freeholder is unwilling to cooperate. While the process can take longer and involves formal notices and valuations, it is often the safest and most predictable option. 

Who qualifies for a Statutory Lease Extension? 

To extend your lease through a statutory lease extension, you must hold a residential long lease. Your lease counts as a long lease if it had an original term of more than 21 years. Even if there are currently less than 21 years left on the lease, it still qualifies if there were more than 21 when it was granted.  

Since January 2025, you don’t need to have owned the property for a certain amount of time before you can extend your lease. You can serve a statutory lease extension notice as soon as you’re the registered owner of the property at the Land Registry. 

What Is a Voluntary Lease Extension?  

A voluntary lease extension (also known as an informal lease extension) is negotiated directly with your freeholder, outside of the statutory framework. 

This means:

• The terms are flexible and agreed between both parties 
• The extension length and ground rent are negotiable
• The process is often quicker and less formal 

However, because there are no fixed legal rules, freeholders may propose less favourable terms. For example, you may be offered a shorter extension or asked to agree to higher ground rent, which could affect your property’s long-term value. Unlike a statutory lease extension, the ground rent is not automatically reduced to a peppercorn. 

Which Lease Extension Option Is Right for You? 

Choosing between a statutory and voluntary lease extension depends on your priorities. If you want certainty, long-term value, and legal protection, the statutory route is often the best option. If you are looking for speed and flexibility, and your freeholder is cooperative, a voluntary agreement may be suitable, provided the terms are carefully reviewed. 

Seeking advice from an experienced property solicitor can help you understand your options, avoid costly mistakes, and secure the best possible outcome. 

What is the Leasehold and Freehold Reform Act 2024? 

The Leasehold and Freehold Reform Act is a key piece of legislation that strengthens leaseholders’ rights in several key ways. As of January 2025, the Act’s first step was to remove the requirement for leaseholders to have owned the property for 2 years before they could extend their lease. 

However, the majority of the Act’s reforms aren’t yet in force. For example, under the Act, standard lease extension term will increase to 990 years, ground rent will be reduced to zero, the need to pay marriage value will be removed, and leaseholders won’t need to pay for the freeholder’s costs in most enfranchisement and lease extension matters. This will make it easier and cheaper for many leaseholders to extend their lease. 

What happens if my lease drops below 80 years? 

Once a lease falls below 80 years, an additional cost known as “marriage value” becomes payable as part of the premium. This cost is shared between the leaseholder and freeholder and reflects the increase in your property’s market value that comes from extending the lease.  

As it can significantly increase the price of extending, it is generally advisable to begin the process well before reaching this threshold wherever possible. 

How much does a lease extension cost? 

The cost depends on several factors including the remaining lease length, the property’s value, and the ground rent. Under the statutory route, you will also need to cover your freeholder’s reasonable legal and valuation costs. 

Speak to a Lease Extension Solicitor 

Lease extensions can be complex, and the right approach will depend on your lease, your freeholder, and your long-term goals. Getting expert legal advice ensures you protect your investment and avoid unfavourable terms. 

Contact our specialist team today to discuss your lease extension options.