Written by Lizzie Kendrew from the Brady Solicitors’ Lease Extensions Team.
When the time comes to extend a lease, leaseholders face an immediate choice: proceed through the statutory route under the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993), or approach the freeholder directly for an informal, voluntary agreement. The right answer depends on the length of your remaining lease, your relationship with the freeholder, and how much certainty you need from the process. This article sets out how each route works, where the protections lie, and when one is likely to serve you better than the other.
What is a statutory lease extension?
A statutory, or formal, lease extension is a legal right granted to qualifying leaseholders under the LRHUDA 1993. If you hold a long lease (originally granted for a term exceeding 21 years) on a property, you are entitled to extend your lease by a further 90 years on top of the unexpired term, and to have your ground rent reduced to a peppercorn rent. A peppercorn ground rent means that no ground rent is payable from the date the new lease is granted.
Until January 2025, a leaseholder was also required to have been the registered owner of the property for at least 2 years before exercising this right. The Leasehold and Freehold Reform Act 2024 removed that requirement. Leaseholders who have recently purchased a flat may now serve a section 42 notice immediately, without waiting.
How does the statutory process begin?
The statutory process begins with the service of a section 42 notice on the freeholder. This notice sets out the premium the leaseholder is offering to pay for the extension and triggers a strict statutory timetable. The freeholder must serve a counter-notice by the date specified in the notice, which cannot be less than 2 months after service. If the counter-notice accepts the right but disputes the premium, a period of negotiation follows. If agreement cannot be reached through the negotiation, either party may apply to the First-tier Tribunal (Property Chamber) to determine the premium.
A section 42 notice is a formal legal document, so it is important that it contains all the required information and is completed correctly. The premium proposed must be a genuine and realistic figure: it does not necessarily need to be the leaseholder’s final position, but a nominal or artificial offer will render the notice invalid. A leaseholder who serves a defective notice risks losing the valuation date fixed by that notice, which may be costly on a lease approaching 80 years, they also remain liable for the freeholder’s reasonable costs and may be barred from serving a further section 42 notice for 12 months.
What legal protection does the statutory route provide?
The key advantages of the statutory route are:
Binding timetable. Once a valid section 42 notice is served, the freeholder must respond by the date specified and engage with the statutory process.
Right to the First-tier Tribunal. If the parties cannot agree on the premium, either party can apply to the FTT to have it determined, without needing the freeholder’s agreement to proceed. That right is time limited: the application cannot be made until 2 months after the counter-notice, and must be made within 6 months of it. If you miss that window then the claim may be lost, with no discretion to extend.
Peppercorn ground rent. The statutory extension always reduces ground rent to a peppercorn. The freeholder cannot insist on retaining or increasing ground rent as a condition of the extension.
Fixed extension term. The extension is always 90 years on top of the unexpired term. The freeholder cannot negotiate a shorter term or seek other amendments to the core statutory entitlement.
However, the statutory route carries a cost the informal route does not. Once the section 42 notice is served, the leaseholder becomes liable for the freeholder’s reasonable valuation and legal costs, and remains liable even if the claim is withdrawn. Tribunal costs are the exception: each side bears its own.
What is a voluntary lease extension?
A voluntary, or informal, lease extension is one reached by direct negotiation with the freeholder, outside of the statutory process. There is no prescribed procedure and no statutory timetable, and the parties are largely free to agree the terms they choose.
What flexibility does the voluntary route offer?
As the voluntary route is not governed by statute, the extension term does not need be 90 years. A leaseholder who wants to add a shorter period, such as bringing a lease above 80 years before a sale, may agree a shorter extension informally that would not be available through the statutory route. Ground rent, however, is no longer a matter of free negotiation. A voluntary extension takes effect as a surrender and re-grant, which brings the new lease within the Leasehold Reform (Ground Rent) Act 2022: the freeholder may continue to charge the existing ground rent for the remainder of the original term, but only a peppercorn for the extended period.
One practical advantage of the voluntary route is that, if both the leaseholder and the freeholder are willing to engage, it can move quicker than the statutory process. However, the speed of the voluntary route depends entirely on the co-operation of both parties. In this case, there is no statutory mechanism to compel engagement.
When deciding whether to pursue the voluntary route, lenders should also be considered. A mortgage lender’s consent is not required for a statutory extension, but it is required for a voluntary extension if the property is mortgaged. This can add time and cost to the informal route.
How do the two routes compare?
| Statutory route | Voluntary (informal) route | |
|---|---|---|
| Legal basis | LRHUDA 1993, s.42 notice | Negotiated agreement between the parties |
| Extension term | 90 years added to unexpired term (fixed by statute) | Any term the parties agree |
| Ground rent | Reduced to a peppercorn for the whole term | Existing rent may continue, capped, for the remainder of the original term; peppercorn thereafter |
| Freeholder participation | Must engage once a valid notice is served | Can refuse to negotiate or withdraw at any time |
| Timescales | Governed by statute; typically 6 to 18 months where terms are agreed | No fixed timescales; depends entirely on the freeholder and leaseholder involved |
| Costs | Leaseholder pays the freeholder’s reasonable valuation and legal costs | As agreed between the parties |
| FTT access | Either party may apply if the premium cannot be agreed, within the statutory window | None; if talks fail, the leaseholder must serve a s.42 notice instead |
| Lender consent | Not required | Required if the property is mortgaged |
| Can you switch routes? | Terms can still be agreed by negotiation; withdrawal triggers a 12-month bar | Yes; the leaseholder can serve a s.42 notice at any point before informal terms are finalised |
Which route is right for you?
If your lease is approaching or has already dropped below 80 years, the statutory route is almost always the right starting point. Once the unexpired term falls to 80 years or less, marriage value becomes payable as part of the premium, and it can materially increase the cost of extension. In that situation, time spent on informal negotiations that do not conclude quickly can be expensive.
If you already have a constructive relationship with the freeholder, and if flexibility on the extension term is important, the informal route may be worth exploring first. Attempting informal negotiations does not waive the statutory right and if discussions break down, the leaseholder can serve a section 42 notice at any time before informal terms are formally agreed.
If the freeholder is unresponsive, commercially focused, or likely to seek to preserve ground rent for the remainder of your existing term, the statutory route provides a certainty and a right of recourse to the FTT that informal negotiations cannot.
The Lease Extensions Team at Brady Solicitors advises on both routes and acts for both leaseholders and freeholders. For advice on which route is appropriate for your circumstances, please contact us for a confidential conversation.
Frequently asked questions
Can I use the voluntary route if I have recently purchased my property?
Yes. Neither route now carries an ownership requirement. The 2-year rule that applied to the statutory route was removed in January 2025 by the Leasehold and Freehold Reform Act 2024, so new owners may proceed either way without waiting.
How long does a statutory lease extension take?
Where terms are agreed by negotiation, leaseholders should plan for 6 to 18 months from instruction to completion. If the First-tier Tribunal is required to determine the premium, the overall process will take longer.
What happens if the freeholder does not respond to a section 42 notice?
If the freeholder fails to serve a counter-notice by the specified date, the leaseholder may apply to the county court for an order granting the extension on the terms proposed in the section 42 notice, including the premium figure stated in that notice. That application must be made within 6 months of the date the counter-notice was due. If it is not made in time, the notice is treated as withdrawn and the claim is lost.
What is marriage value and when does it apply?
Marriage value is the additional value that arises from merging the freehold and leasehold interests. Under the law currently in force, it applies where the unexpired term is 80 years or less and forms part of the premium the leaseholder must pay. The Leasehold and Freehold Reform Act 2024 provides for the abolition of marriage value, but as at August 2026 that provision is not in force and cannot take effect until secondary legislation sets the new valuation rates. It remains payable on extensions completing now.
Do I need to live in the property to qualify for a statutory lease extension?
No. There is no requirement to live in the flat, and no minimum period of ownership. You qualify if you hold a long lease of the flat, meaning one originally granted for a term of more than 21 years. The occupation test was removed in 2002 and the 2-year ownership requirement was abolished on 31 January 2025. Buy-to-let and non-resident owners qualify on the same terms.
