The Leasehold Reform, Housing and Urban Development Act 1993 ('the 1993 Act') enables tenants to extend their lease by 90 years in addition to the unexpired term of their lease at a peppercorn ground rent in return for a premium.
As the length of the unexpired term of a lease gets shorter, the premium payable to extend the lease increases. If a lease has less than 80 years unexpired then marriage value is payable to the landlord which could be significant. A tenant may also encounter difficulties if they want to sell their flat and the unexpired term is considered un-mortgageable. Different lenders have different criteria but generally they require an unexpired term of at least 70 years.
How do I qualify?
In order to qualify for a statutory lease extension the flat must be held under a long lease (i.e. granted for a term of more than 21 years) and the flat must have been owned for more than two years. It is important to note that the flat must have been registered in the tenant's name at the Land Registry for at least two years before being entitled to a statutory lease extension.
The right to acquire a statutory lease extension is only open to those tenants that have a residential lease. If the lease is a business lease, the landlord is a charitable housing trust and the flat is provided by the charity as part of its charitable work, the building is located within a precinct boundary of a cathedral or the building is built on land held by the National Trust or the building is owned by the Crown, the tenant will not be able to exercise their statutory rights to a lease extension.