Leasehold property owners warned against informal extensions

Agents should be advising sellers and buyers against the dangers of informal leasehold extensions.

In an explosive message delivered at this week’s 2016 LEASE annual conference, speaker Louie Burns delivered a number of warnings.

Burns, managing director of Leasehold Solutions, said that many of the UK’s 4.1m leasehold flat owners are being “duped” into informal deals by “predatory freeholders, whose only goal is to extract as much money as possible”.

Burns said: “At first glance informal lease extensions are designed to make it look like the leaseholder is getting a great deal, but nothing could be further from the truth.

“There are many dangers in accepting informal lease extensions, not least the actions taken by freeholders to hide the true cost of the agreement.

“ I call these informal lease extensions ‘Trojan horse offers’.

“They look like a gift but when you look inside, the details can be catastrophic.

“Over the years I’ve seen every dirty trick under the sun from freeholders, whose only concern is to extract more money from flat owners.

“Freeholders often claim that an informal lease extension will save the leaseholder money, but by inserting clauses such as onerous ground rent schedules (which often double every decade), increased licence fees and service charges, and delaying tactics, not to mention the cost of the lease extension itself, leaseholders often end up paying £10,000s, if not £100,000s, more over the years than if they’d opted for the legal, statutory route.”

Leaseholders have a legal right to extend their lease by an additional 90 years and reduce the ground rent to zero if they have owned their flat for more than two years.

Informal agreements, by contrast, are not protected by the law and the freeholder can make any changes they want to the terms of the lease, such as only extending the lease back up to 99 years.

Burns warned: “Many flat owners are still unaware of their rights and, when it comes to leasehold law, the devil is very much in the detail.”

He added: “I see so many flat owners’ sales fall through because someone has not understood the implications of the informal lease extension offered, and flats can even become unsellable due to oppressive ground rent clauses and service charges resulting from informal arrangements.

“I would only ever advise a flat owner to pursue a statutory lease extension, and to avoid any informal offers like the plague.”


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  1. Polecat 1

    I cannot see any conveyancer or lender proceeding on this basis.

  2. Erikas Grig

    I recently came across this article via search and I do not particularly agree with what was said in this article. Firstly, saying that informal lease extensions should be avoided as ‘trojan horse’ is completely not valid. It appears that the information sources are pushing people to only approach lease extensions via statutory route which is convenient for professionals but not the person extending the lease. The statutory lease extension professional costs are higher when compared to using same professionals but only using it for informal lease extension.

    In practice, leaseholders can see their professional costs slashed by up to 50% if they approach lease extension informally. Moreover, informal lease extensions can be agreed within a matter of days compared with statutory route that takes at least 4 months as minimum.

    However, this is not without pitfalls and leaseholders considering approaching lease extension informally should instruct a professional valuer to go over the lease new lease terms and the premium payable to make sure that they are getting a good deal and not getting ripped off. Worst case scenario if good terms cannot be agreed it is always possible to serve the statutory proceedings to begin a formal lease extension.

    I personally agreed lease extensions for my clients within a couple phone calls or emails with the landlord’s surveyors resulting in saved professional costs and the terms and premiums equivalent to that of statutory lease extension.



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