Freeholder's informal lease extension offer: 10 clauses to check before you sign

An informal offer from your freeholder isn't automatically a bad deal, but it is the freeholder's draft, on the freeholder's terms. Before you sign, compare it clause by clause with what the statutory route gives you by law: 90 extra years on top of what you have left, and ground rent reduced to a peppercorn (in practice, zero). If the informal deal gives you less, the lower price may not be a saving.

Key takeaways

• The statutory benchmark (Section 42 route) is 90 years added and a peppercorn ground rent (LEASE).
• Informal offers often extend only to 99 or 125 years in total and can add new fees, for example to remortgage, let, sell or keep a pet (MSE).
• Nothing is binding until you sign. One forum reply warned an informal price "could rise… from £5k to £15k" (MSE forum).
• Check the new lease with your lender before you sign: lending policies differ.
• If you're close to 80 years, ask your solicitor whether serving a Section 42 notice would protect your position while you negotiate.

Is the freeholder's informal offer a good deal?

You can only tell by comparing it with the statutory route. An informal (or "voluntary") lease extension is simply a private deal: the freeholder can offer whatever term, ground rent and conditions it likes, and you can accept, negotiate or refuse. A statutory extension is the legal right you start by serving a Section 42 notice (see our Section 42 notice guide). Its main terms are fixed by law, and if you can't agree a price, the First-tier Tribunal decides.

HomeOwners Alliance warns that an informal extension "may appear at first to be cheaper and quicker" but "you could end up paying thousands more" (HOA). MSE puts it more bluntly: "be very careful when it comes to informal lease extensions (formal extensions are best)" (MSE).

Some informal deals are fair or faster. Price both options before deciding.

Sources: LEASE, MSE, updated 2026. See our cost guide for fee ranges.

The 10 clauses to check before you sign

Go through the draft lease or offer letter with your solicitor. Words in bold are what to look for.

1. Total term after the extension. How many years will you have on the day it completes? An offer "to 99 years" on a lease with 85 left adds only 14 years. The statutory route would take 85 years to 175.
2. When the new term starts. Check the start date of the new term. A term counted from the original lease date gives you fewer years than one counted from today.
3. Ground rent: kept, raised or removed? Look for the amount and any review, doubling or RPI/index clause. One leaseholder was offered a 99-year extension with ground rent "£10 rising to £100/£200/£400" (MSE forum). Compare with the peppercorn you'd get on the statutory route.
4. The premium and what it covers. Is the figure the premium only, or does it include the freeholder's legal and valuation costs? Is VAT added on their fees?
5. How long the price is held. Get the figure, its expiry date and any conditions in writing. Nothing binds the freeholder until contracts are signed.
6. The freeholder's costs and quote fee. Who pays which fees, and are any non-refundable if the deal falls through? MSE reports quote fees of £100 to £1,000, often paid up front, which you may lose if you pull out (MSE).
7. New permission fees. Look for new charges or consents to remortgage, sublet, assign (sell), make alterations or keep a pet. MSE lists these as typical extras in informal deals.
8. Service charge and repair clauses. Does the new lease change how the service charge is calculated, add a reserve fund contribution, or move repair duties to you? On the statutory route, the existing terms are generally carried over.
9. Lender acceptability. Ask your lender (or the buyer's lender if you plan to sell) whether it will accept the new term and the ground rent. Lending policies differ (Mortgage Solutions), and one landlord reported in September 2026 that on a remortgage "the lender will require a lease extension to 99, 125 or 999 years" (Property118).
10. Your statutory rights and the 80-year mark. Does the offer ask you to drop or not serve a Section 42 notice? If your lease is close to 80 years, will the deal complete before you get there? Ask your solicitor whether serving a notice would protect your position, because MSE notes "the clock stops ticking once you serve notice" (MSE).

Why is the informal premium lower? The ground rent trade-off

A lower premium with a ground rent that stays or rises isn't a discount: you pay part of the price later, every year. A buy-to-let owner on MSE described the trade-off: "A shorter extension with higher ground rent could lower the premium… I think I prefer a lower premium" (MSE forum). That can suit an investor, but make it a deliberate choice.

Another owner, offered either a 99-year or a 26-year informal extension, asked whether the freeholder would "just divide the amount… by 4". The reply: "It won't be as simple as 4 times more for the 99 year" (MSE forum). Premiums are not linear, so ask your valuer to price each option against the statutory figure.

Will the reforms fix a high ground rent later? Not yet. A cap on existing ground rents of £250, falling to zero after 40 years, is only in a draft Bill and is "unlikely before 2028" (MSE). LEASE says the plan "is not yet law and needs to be approved by Parliament" (LEASE). Don't sign an escalating ground rent on the assumption that it will be capped. See our reform tracker.

Can I negotiate the freeholder's offer?

Yes. An informal offer is an opening position, and your lever is the statutory route. To use it, you need your own figure.

• Get an independent valuation from a chartered surveyor (RICS) of the statutory premium. Valuer fees are about £400-£900 (MSE).
• Ask for a revised draft with a peppercorn ground rent, a longer term or without the new permission fees.
• Compare totals, not headlines: premium + both sides' fees + the ground rent you'll still pay.

Some landlords won't negotiate informally at all. One forum reply said a housing association "will only do Statutory Lease extensions (not informal ones)" (MSE forum, Feb 2026).

Quick decision guide: sign, negotiate or go statutory?

• The offer matches or beats the statutory benchmark (90+ years added, peppercorn, no new fees) and your lender accepts it → a fair informal deal may be worth signing, after your solicitor has checked the draft lease.
• The price is attractive but ground rent stays or escalates → ask your valuer to compare the total cost over the years you expect to own the flat, and check lender acceptability.
• The term is short (99 or 125 years in total) and you're near 80 → ask your solicitor about serving a Section 42 notice first; see our now-or-wait guide.
• New permission fees or changed service charge terms → negotiate them out, or compare with the statutory route.
• You're selling soon → check what the buyer's lender needs; our guide to assigning a Section 42 notice to your buyer covers the alternative.

FAQ

Is an informal lease extension cheaper than a statutory one? Sometimes the premium is lower, but you may get fewer years, keep paying ground rent or take on new fees. HOA warns you "could end up paying thousands more". Compare the total value of each deal, not only the price.

Can the freeholder change the price after making an offer? Yes, until a contract is signed. A forum reply warned an informal price "could rise… from £5k to £15k" or the freeholder could refuse. Get the figure and its expiry date in writing.

Will an informal lease extension get rid of my ground rent? Only if the new lease says so. The statutory route reduces ground rent to a peppercorn; an informal deal may keep it or increase it. Look for doubling or index-linked review clauses.

Do I have to pay the freeholder's fee for an informal quote? Many freeholders ask for one. MSE reports quote fees of £100 to £1,000, often paid up front, and you may lose them if you pull out. Ask in writing what the fee covers and whether it's deducted from the premium.

Will my lender accept an informal lease extension? That depends on the lender, the new term and the ground rent. Lending policies differ, so ask your lender (or a buyer's lender) to confirm before you sign.

Can I serve a Section 42 notice while negotiating informally? Yes. Serving notice starts the statutory timetable and, as MSE puts it, "the clock stops ticking", while you can still agree terms with the freeholder. It also makes you liable for the freeholder's reasonable costs, so ask your solicitor whether it suits your timing.

Next steps

Write down the offer's term, ground rent, price, fees and any new clauses. Our free Prepare a lease extension quote brief checklist helps you get comparable quotes from a solicitor and valuer, and Compare statutory and informal routes lets you put the offer next to the statutory benchmark.

Related: Lease extension cost: calculator vs quote vs final bill · Can't find your freeholder? The missing-landlord route

Important: this is not legal or financial advice. Lease Extension Compass is independent, not a law firm, and doesn't recommend or rank providers. This checklist is general information based on public sources dated up to October 2026. Before you sign an informal lease extension, have the draft lease checked by a qualified leasehold solicitor and get a valuation from an RICS-registered surveyor.

Sources

1. Lease extension and leasehold reforms – LEASE (updated 27 Jan 2026)
2. Extend your lease – MoneySavingExpert (updated 17 Aug 2026)
3. Lease extension costs – HomeOwners Alliance (updated 22 Oct 2026)
4. Extend now or wait? The short-lease dilemma – Mortgage Solutions (9 Sept 2026)
5. Landlord thread on unextended flats – Property118 (15 Sept 2026)
6. "Lease extension voluntary route" – MSE forum
7. "Lease extension questions", p2 – MSE forum (2013)
8. "Leasehold extension after purchase" – MSE forum (2023)
9. "Help with leasehold (complicated)" – MSE forum (Feb 2026)

General information, not legal advice. Rules and deadlines can change by jurisdiction. Check current laws and consult an appropriately qualified professional before acting.