Extending a lease – Formal or informal approach?

What's your ground rent and where in the Country is the property? Did the freeholder agree to zero the ground rent? Currently, a ground rent above £250/£1000pa is a problem for most lenders, making the property difficult to sell. If the ground rent remains high, I would opt for a formal extension, which would zero the ground rent.

Of course, the forthcoming leasehold reforms will, hopefully, make the extension/enfranchisement process easier and cheaper.

Therefore, I would wait to see how the legislation progresses. You've got time.

Did you get the figure you are happy with in writing? Is it less than the formal calculations would make it? And is the Ground Rent being amended to a Peppercorn?
If so just do a Deed of Variation to the Lease. You do not need to do a Lease Surrender and Regrant.
Depending on the Ts&Cs in your Lease you may be liable for both your and your Freeholders legal fees.
Just a question. Why aren’t you extending the Lease to 999 years?

Reply to the comment left by Judith Wordsworth at 03/04/2025 - 10:19
A deed of variation extending the term (or increasing the area demised) acts as a surrender and regrant. It would be better to be clear about what you're doing and use a new lease, and the ground rent under that new lease has to be £1 because of the Leasehold Reform (Ground Rent) Act 2022. The other terms of the lease can be copied over or incorporated by reference (but if the terms are incorporated by reference rather than set out in full then it will be necessary to keep on looking at two documents instead of one to know what the lease says). And you'll have to get your mortgagee involved. They will have panel solicitors who do this all the time.

If you ask your landlord to confirm the agreed terms in writing including whether any of the existing lease terms will change, and to let you know who will act as their solicitors, even though the heads of terms are "subject to lease" that will focus their mind and hopefully make them feel committed. You can then take a small bet on the fees of your mortgagee's panel solicitors, make sure any costs undertaking you give to pay the landlord's legal fees won't apply if the landlord pulls out, and keep chasing progress so that it's all done within a few months.

Reply to the comment left by Kate Gould at 03/04/2025 - 10:33
Hence a Deed of Variation has been preferable and have drafted and used my own even when selling.

Solicitors would rather S&R-G as brings in more fees, lol.

Reply to the comment left by NewYorkie at 03/04/2025 - 09:53There could well be legal challenges under the Human Rights Act so it would be unwise to expect leasehold reform to be implemented in full, or any time soon.
The Government has mooted the idea of making leasehold extensions free. This would certainly encounter stiff opposition as it is a clear assault on property rights.

There could well be legal challenges under the Human Rights Act so it would be unwise to expect leasehold reform to be implemented in full, or any time soon.
The Government has mooted the idea of making leasehold extensions free. This would certainly encounter stiff opposition as it is a clear assault on property rights.

Reply to the comment left by Judith Wordsworth at 05/04/2025 - 18:59And what happened when the Land Registry processed your application for registration of the Deed of Variation?
When you extended as part of selling, you won't have found out because the buyer's solicitor will have made the application to the Land RE=egistry. In fact, it makes no difference using a deed of variation when you are selling because the mortgage is changing anyway.
See Land Registry Practice guide 28: extension of leases para 2.2 and in particular at the end of that paragraph it says "As the deed will operate as a surrender of the existing lease and the grant of a new one, you must consider any charges against the existing leasehold title. See Deeds of substituted security."
If you want to extend when you are not selling, as I said in my second comment 3 April at 10:40am, use your mortgagee's panel solicitor, they probably have a standard, cheap service to sort this out, so my reply was not to encourage paying large fees to solicitors.

Reply to the comment left by Judith Wordsworth at 05/04/2025 - 18:59
Using a deed of variation when selling is fine, because the buyer is getting a new mortgage anyway, but the effect is still a surrender and regrant.

Reply to the comment left by Robin Wilson at 06/04/2025 - 07:28
Governments assault landlords' property rights all the time, whether it's through regulation or taxes. The looming Renters Right Bill is a classic example. Why should freeholders be any different? Buying freeholds is an investment like any other, and as everyone knows, investments can go up and down.