Informal Lease Extension Process: A Practical Guide
Informal Lease Extension Process: A Practical Guide
If your lease term is starting to run low, it’s time to consider extending it. You typically have two options: the formal statutory lease extension route or the informal lease extension. While the formal route is governed by strict legal procedures under the Leasehold Reform, Housing and Urban Development Act 1993, the informal route is much more flexible—but also more uncertain.
In this guide, we explain how the informal lease extension process works, what it involves, how long it can take, and what it’s likely to cost. We'll also cover the pros and cons so you can make an informed decision before you approach your freeholder.
What is an Informal Lease Extension?
An informal lease extension is just what it sounds like—you and your freeholder negotiate directly, without using the formal statutory process. There’s no legal framework compelling the freeholder to agree, so both sides have to be willing to talk and come to a mutual agreement.
While it can be faster and more flexible, it’s important to understand that an informal extension offers none of the protections provided by the formal route. The terms, length of extension, and ground rent are all open to negotiation, and you’ll need to be confident you’re getting a fair deal.
Why Choose the Informal Route?
✅ Pros
- Flexibility: You can negotiate the lease length, ground rent, and other terms to suit your needs.
- Cost Saving: You avoid serving a formal Section 42 Notice and some of the related professional fees.
- Long-Term Extensions: In rare cases (especially where you’re also a freeholder), you may be able to extend your lease to 999 years at zero premium.
- Faster (Potentially): If your freeholder is cooperative, it may be quicker than going down the formal route.
❌ Cons
- No Guarantees: Your freeholder is not legally required to extend your lease or even negotiate with you.
- Unfavourable Terms: Informal deals often come with ground rent clauses that continue the current rent or even increase it.
- Legal Risk: Without legal protections, you could waste time and money if negotiations break down.
- Loss of Statutory Benefits: You won’t automatically get a 90-year lease extension or reduction to a peppercorn rent (zero ground rent), which the formal route guarantees.
When Is It a Good Idea to Go Informal?
Informal lease extensions might suit leaseholders who:
- Want to save time and money in the short term.
- Have a cooperative freeholder.
- Are happy to accept less favourable terms in exchange for convenience.
- Already have a long lease (e.g., 85+ years) and want to top it up.
However, if your lease has dropped below 80 years, you may end up paying significantly more for your premium and could lose out on the “marriage value” protection the formal route provides.
Informal Lease Extension Timeline
Unlike the formal process, there are no fixed deadlines when negotiating informally. The timeline depends entirely on your and your freeholder’s availability and willingness to engage. On average, the process takes between 4 to 12 weeks, though it can be shorter or longer depending on how straightforward the negotiations are.
Here's a typical informal extension timeline:
- Valuation (1-2 weeks)
- Negotiation (2-6 weeks)
- Solicitor instructed, legal work begins (1-3 weeks)
- Exchange and completion (1-2 weeks)
- Registration at Land Registry (1-2 weeks)
Step-by-Step: How to Extend a Lease Informally
1. Make or Receive an Informal Offer
You can either approach your freeholder or they might contact you with an offer. You’re under no obligation to accept it. Informal offers usually look something like:
"We propose a 99-year lease extension for a premium of £15,000, with ground rent continuing at £250 per year."
If the premium seems high or the rent terms aren’t favourable, it’s perfectly reasonable to negotiate—or consider the formal route instead.
You can contact your freeholder directly or through their managing agent. If you’re unsure how to reach them, check your ground rent demands or download your title deeds from HM Land Registry for a small fee.
Need a starting point? Use our [Informal Lease Extension Letter Template] to make your offer clearly and professionally.
2. Instruct a Lease Extension Surveyor
Before you make or respond to an offer, you’ll need a RICS-qualified surveyor who specialises in lease extensions. They’ll provide an accurate valuation of what your lease is worth and help you benchmark your freeholder’s offer.
Tip: Ask your surveyor to provide two valuations—one for an informal extension (e.g., 99 years) and one for a formal statutory 90-year extension. This way, you can compare the costs and benefits side-by-side.
Typical valuation fees range from £600 to £900, depending on the complexity of your lease and property.
3. Negotiate the Terms
Once you’ve got a valuation in hand, you can negotiate with your freeholder. This might include:
- Length of extension (e.g., 90 or 125 years)
- Premium (price)
- Ground rent (ideally set to zero)
- Responsibility for costs (yours and theirs)
Remember: informal deals can include escalating ground rent clauses, which could negatively affect your property’s future value or mortgageability. Always check the fine print.
4. Instruct a Solicitor
Once you’ve agreed the key terms, your solicitor will:
- Review the new lease terms.
- Check for any unfavourable clauses (e.g., unfair rent reviews).
- Handle the payment of the premium.
- Liaise with the freeholder’s solicitors.
- Ensure all outstanding service charges or ground rent are settled.
- Register the new lease with the Land Registry.
Solicitor fees for informal lease extensions typically range from £820 to £1,200 (plus VAT). At Parachute Law, we offer transparent pricing and can provide a free quote to help you budget.
5. Register Your New Lease
Once completed, your solicitor will update the Land Registry to reflect your new lease terms. This step is essential for protecting your legal interest in the property. Registration fees vary depending on the premium and lease term, but usually fall within the £40–£125 range.
Costs of an Informal Lease Extension
Here’s a breakdown of typical costs:
Item | Estimated Cost |
RICS Valuation | £600 - £900 |
Leaseholder’s Solicitor Fees | £820 - £1,200 |
Freeholder’s Solicitor Fees | £820 - £1,200 |
Land Registry Search Fees | £6 - £15 |
ID Checks | £15 |
Bankruptcy Search (if needed) | £2 |
Land Registry Registration Fees | Variable (£40–£125+) |
Stamp Duty Land Tax (if applicable) | Variable (based on premium) |
Important: Even if the deal falls through, you’ll still need to pay for your valuation and any legal advice you've already received.
Informal vs Formal Lease Extension: Which is Better?
Factor | Informal Route | Formal Route |
Cost | Lower upfront costs | Higher professional fees |
Ground Rent | Can continue or increase | Reduced to zero (peppercorn) |
Legal Protection | None | Statutory protections under law |
Time Frame | Varies (weeks to months) | Typically 6–12 months |
Negotiation | Fully negotiable | Leaseholder has the legal advantage |
Risk of Rejection | High (freeholder not obliged) | Freeholder must comply |
Final Thoughts
While the informal lease extension process can be quicker and more flexible, it’s not without its pitfalls. You’ll need to weigh cost savings and speed against the lack of legal protection and uncertainty.
If your lease is approaching the 80-year mark—or has already dropped below—it’s usually safer to pursue the formal route. But if you're working with a cooperative freeholder and you're confident the deal is fair, informal can work well.
Either way, getting expert advice early on is key. At Parachute Law, we can walk you through your options, help you weigh the costs, and make sure your lease extension is handled with care and professionalism.
Ready to Make Your Property Move?
At ParachuteLaw, our expert property solicitors are here to guide you through every step of the process. Whether you’re buying, selling, or need legal advice, we provide clear, reliable, and efficient services to make your property journey smooth.
