What Happens When a Lease Expires
A long flat lease rarely reaches its end date with nobody noticing. Long before it does, the shrinking term starts to cost money, and the law gives the owner a way out.
The Short Answer: It Depends Who Lives There
Where a long lease at a low rent ends and the leaseholder is living in the flat as their only or main home, Schedule 10 to the Local Government and Housing Act 1989 continues the tenancy on the same terms until it is ended in the way that Schedule sets out. A flat that is let out, one owned by a company, or a lease with a higher ground rent may not have that protection at all.
To end a protected tenancy, the landlord has to serve notice, months before the end date. The notice either proposes an assured tenancy, at a market rent rather than a ground rent, or seeks possession on one of the limited grounds the law allows, such as breach of the tenancy or, for certain public landlords, redevelopment. Either way the owner stops owning a long lease with capital value and becomes, at best, a tenant paying rent.
Why the Problem Starts Decades Before the End
A lease is a wasting asset. Its value falls as the term runs down, slowly at first and then faster. Many mortgage lenders will not lend against a flat once the unexpired term drops below their own minimum, which shrinks the pool of buyers to cash purchasers.
The cost of putting it right rises at the same time. Under the current valuation rules, once 80 years or fewer remain, the premium for a statutory lease extension includes a share of the marriage value, which can add substantially to the price.
The Way Out: Extending the Lease
Most qualifying flat owners have a statutory right to a new lease, under the Leasehold Reform, Housing and Urban Development Act 1993, for the unexpired term plus 90 years at a peppercorn ground rent, in return for a premium. Since 31 January 2025 an owner no longer has to have owned the flat for two years before using that right.
An extension can also be agreed informally with the landlord, on whatever terms the two sides accept, and in a share of freehold block the owners can grant one to each other. Leaseholders can also join together to buy the freehold, which puts the lease terms in their own hands.
Where a Managing Agent Fits
A lease extension or freehold purchase needs a valuer and a solicitor, and we are neither. What the landlord's side needs, whoever the landlord is, is the information: the lease, the service charge position, the insurance and the building's records. We provide that for the buildings we manage, and we administer the process for resident management companies and freeholders who are granting extensions.
Common Questions
What Happens When a Leasehold Flat's Lease Runs Out?
If the owner lives there as their only or main home and the ground rent is low, the tenancy usually continues on the same terms until the landlord ends it by notice, either by proposing an assured tenancy at a market rent or by seeking possession on limited grounds. A let flat or a company-owned one may have no such protection.
Can You Renew a Lease on a Flat?
Not renew as such, but most qualifying owners can extend: the statutory route adds 90 years to the remaining term at a peppercorn ground rent, for a premium. An informal extension can also be agreed with the landlord.
At What Point Does a Short Lease Become a Problem?
Earlier than most owners expect. Many lenders set a minimum unexpired term, and under the current rules the extension premium rises once 80 years or fewer remain.
Has the 2024 Act Changed Lease Extensions?
One change is in force: since 31 January 2025 there is no two-year ownership requirement before using the statutory right. The longer 990-year term and the new valuation rules in the Leasehold and Freehold Reform Act 2024 have not been brought into force.
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