Yes, you can. Under the Leasehold Reform Act 1967 (‘the 1967 Act’) the owner of a leasehold house may be entitled to a statutory lease extension of 50 years. In this case, there is no premium (price) to pay for a lease extension of a house. But when your new lease begins, the old ground rent may be replaced with a more expensive ‘modern ground rent’, which is based on the letting value of the house and other measures. You will also have to pay the landlord’s legal and valuation costs.
However, if you choose to go for an informal (non-statutory or voluntary) arrangement with your landlord to extend the lease, you will only have to pay a peppercorn (zero) ground rent on the new term and the landlord cannot increase the ground rent that is charged on the balance of the term of the original lease, it must not exceed the original ground rent and a lower ground rent may be agreed for the balance of the original term. In any case, you should closely check the terms of any new lease before agreeing to them.
Whether you take the formal statutory or informal non-statutory route, it is important to seek professional advice before seeking an extension.
Should I buy or extend?
If you have the statutory right to extend the lease, then you also have the option of buying the freehold. As you can only extend your lease by 50 years, you may decide that buying the freehold makes better sense in the long term and although is likely to be more expensive, you will no longer have to pay ground rent.
More information you might find useful:
- UK and Welsh governments publish guidance on the Leasehold Reform (Ground Rent) Act 2022
- Houses – Qualification and Valuation
- More Frequently Asked Questions on Houses – Enfranchisement and Lease Extension
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