Leasehold property ownership can be complex, especially when the remaining term on the lease begins to fall. Many leaseholders reach a point where extending the lease becomes necessary to protect the value of their home and avoid difficulties with selling or remortgaging. While the statutory route is well known, thousands of leaseholders consider an informal lease extension instead. This option can be quicker and more flexible, but it also carries risks.
At Blackstone Solicitors, we support clients across England and Wales with both statutory and informal lease extensions. We help property owners understand their rights, negotiate favourable terms and avoid common pitfalls. This article takes a detailed look at informal lease extensions, how they work and whether they might be right for you.
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For a free initial discussion with a member of our New Enquiries Team, get in touch with us today. We are experienced in dealing with all the legal aspects of commercial leases, and once instructed, we will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you are on the best possible footing from the start and also avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or click here to make a free enquiry and a member of the team will get back to you.
What Is an Informal Lease Extension?
A Negotiated Alternative to the Statutory Process
An informal lease extension is an agreement reached directly with the freeholder, without using the formal statutory process set out in the Leasehold Reform, Housing and Urban Development Act. The negotiation is voluntary, and both parties are free to agree almost any terms they wish.
This approach differs from the statutory route in several ways. There is no prescribed calculation for the premium, no fixed number of years that must be added and no strict timetable that both sides must follow. Instead, the outcome depends entirely on negotiation and the willingness of the freeholder to reach an agreement.
Why Leaseholders Consider an Informal Extension
Potential Advantages
Informal extensions appeal to many leaseholders because they can, in the right circumstances, offer several benefits.
Speed and Flexibility
The informal approach can move more quickly than the statutory route. It avoids the need to serve formal notices and may allow the parties to progress at a pace that suits both sides.
Ability to Restructure the Lease
Leaseholders sometimes use the informal route to modernise outdated clauses. Ground rent arrangements, repair obligations, service charge mechanisms and other terms may be renegotiated as part of the extension.
Negotiated Premiums
Although the freeholder ultimately decides whether to negotiate, the premium can sometimes be agreed at a level that is acceptable to both sides without following strict statutory valuation rules.
Tailored Extension Length
Instead of being limited to the standard additional ninety years offered by the statutory process, the informal route allows leaseholders to choose extensions of different lengths. Some prefer a shorter addition to reduce cost. Others may negotiate a longer term to avoid future uncertainty.
Risks of an Informal Lease Extension
Important Considerations Before Negotiating
While the informal route can offer benefits, it comes with significant risks that must be managed carefully.
No Automatic Right to Fair Terms
Under the statutory route, the leaseholder has legal protections. The informal route removes those protections, allowing the freeholder to propose terms that may be unfavourable.
Higher Ground Rent
Many leaseholders are unaware that some freeholders use informal extensions as an opportunity to increase ground rent. This can include doubling clauses or escalating formulas. Such terms can affect the value of the property and may make it difficult to sell later, especially given the lending restrictions applied by many mortgage providers.
Unbalanced Clauses
Freeholders may include new obligations, modify existing rights or alter the lease structure in a way that benefits them rather than the leaseholder.
Lack of Timetable
Without statutory deadlines, negotiations can drag on. Some freeholders delay matters intentionally, especially when the lease is close to entering a more expensive valuation bracket.
Risk of a Poor Premium
Without statutory valuation rules, the freeholder may demand a premium that is higher than what you would pay under the formal route.
Because of these risks, legal advice is essential before entering into any informal negotiation.
Informal vs Statutory Lease Extension
Key Differences You Should Understand
Leaseholders considering an extension should understand the two available routes.
| Aspect | Informal Lease Extension | Statutory Lease Extension |
| Legal protection | None | Full protection under legislation |
| Typical extension | Negotiated | Additional 90 years |
| Ground rent | Can change | Reduced to zero |
| Premium | Negotiated | Set through statutory valuation |
| Timescales | Unregulated | Strict, enforceable |
| Freeholder obligations | Not obliged to negotiate | Must comply with statutory process |
The statutory route provides clarity and protection but can be slower and more rigid. The informal route, while flexible, requires careful negotiation and expert legal support.
How the Informal Lease Extension Process Works
Step by Step Guide
Each negotiation is different, but most informal lease extensions follow a similar pattern.
- Initial Discussions
The leaseholder approaches the freeholder to express interest in extending the lease. The freeholder may request information and indicate whether they are willing to negotiate.
- Valuation
Leaseholders should obtain independent valuation advice to understand the likely premium. This prevents overpayment and strengthens negotiation.
- Negotiation
The main terms to discuss include:
- Premium
- Length of the extension
- Ground rent changes
- Amendments to the lease wording
- Responsibility for legal and valuation fees
This stage can take time, and freeholders may make proposals that require careful scrutiny.
- Heads of Terms
Once the broad outline is agreed, the parties create a document setting out the principal terms.
- Drafting the New Lease
Solicitors prepare the extended lease, ensuring that all clauses are clear, enforceable and in the leaseholder’s best interests.
- Completion and Registration
The new lease is formally completed and registered with HM Land Registry.
At Blackstone Solicitors, we guide clients through each stage, ensuring the process remains transparent and that the leaseholder is fully protected.
Negotiating the Best Possible Terms
How We Protect Leaseholders
Negotiation requires an understanding of both legal and valuation principles. Our role is to ensure that leaseholders obtain an agreement that enhances the value of their property without creating long term problems.
We help by:
- Advising on the premium and financial implications
- Reviewing proposed ground rent clauses
- Identifying unfair or unbalanced terms
- Ensuring the lease complies with modern lending criteria
- Negotiating amendments that benefit the leaseholder
- Protecting your position throughout the process
Many informal draft leases contain clauses that are not in the leaseholder’s best interests. Our solicitors examine every detail to safeguard you from hidden risks.
Common Issues with Informal Extensions
Problems Leaseholders Should Watch For
Certain patterns appear frequently in informal extensions. Leaseholders should be alert to:
Rising Ground Rent
Clauses that escalate every ten or twenty years can reduce a property’s marketability.
New Fees Hidden in the Lease
Some freeholders insert consent fees or administration charges that were not present before.
Short Additions to the Term
An extension of twenty or thirty years may appear cheaper but can dramatically reduce property value over time.
Lack of Clarity
Ambiguous drafting can lead to disputes about repair obligations, service charges or access rights.
Our team ensures every clause is transparent and enforceable.
Should You Choose an Informal Lease Extension?
Balancing the Pros and Cons
The informal route can be suitable when:
- The freeholder is cooperative
- The leaseholder wants flexibility
- Ground rent arrangements can be improved
- A quick, negotiated solution is preferred
However, the statutory route is often safer because it guarantees:
- Zero ground rent
- A long extension
- Predictable valuation rules
- Greater legal protection
We offer honest, practical advice to help you choose the route that best suits your circumstances.
Why Choose Blackstone Solicitors?
Expert Support for Leaseholders Across England and Wales
Our property team has significant experience in both statutory and informal lease extensions. We provide:
- Clear, straightforward advice
- Thorough lease review and risk assessment
- Skilled negotiation with freeholders
- Transparent fee structures
- Support from start to completion
We work with leaseholders of flats, maisonettes and converted houses across England and Wales, ensuring their property interests are fully protected.
Contact Our Lease Extension Solicitors
Get Expert Guidance Today
If you are considering an informal lease extension or need advice on which route to take, Blackstone Solicitors can help. We ensure you understand your rights, negotiate effectively and secure terms that protect the long term value of your property.
To discuss your situation or arrange a consultation, contact our lease extension specialists today. We are ready to support you wherever you are in England or Wales.
How we can help
We have a proven track record of helping clients deal with commercial leases. We will guide you through the process and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact Our Commercial Property Solicitors
It is important for you to be well informed about the issues and possible implications of dealing with a commercial lease. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.
To speak to our Commercial Property solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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