Clarity and direction from trusted professionals
Receiving an informal offer from your freeholder to extend your lease might seem like a convenient shortcut — possibly even with the promise of a quicker process or a lower headline cost. But informal offers come with risks that aren’t always obvious at first glance, and they can end up costing you more, in money and in time, than doing things the statutory way from the outset.
This guide explains what an informal offer actually is, why the process itself works against leaseholders, what to watch for in the terms, and how to protect yourself if you’ve received one.
What Is an Informal Lease Extension Offer?
An informal lease extension offer is a voluntary proposal made directly by your freeholder — outside of the statutory framework set out in the Leasehold Reform, Housing and Urban Development Act 1993. These offers:
- Are not governed by statutory legislation
- Can vary freely in lease length, ground rent, and cost
- Don’t carry the same legal protections as the statutory route
The freeholder proposes to extend your lease in exchange for a premium — but unlike the statutory process, there’s no requirement for that premium to be calculated fairly, transparently, or in line with any recognised valuation methodology. The freeholder can simply name a figure, with no obligation to justify it.
Why the Informal Process Itself Works Against You
Even before you get to the specific terms of an offer, the process of going informal carries risks that catch a lot of leaseholders out.
You won’t see the real terms until it’s too late to walk away cheaply
The specific clauses of your new lease — repairing obligations, financial covenants, restrictions — are often not revealed until the matter has already reached solicitors. By that stage, you may have already paid upfront fees to the freeholder and racked up your own legal costs just to get that far. If the freeholder then introduces new obligations that weren’t in your original lease, there’s often little room to have them removed. Walk away at that point, and the fees and time you’ve already spent are simply gone.
Upfront fees are common — and usually non-refundable
Many freeholders charge a fee just to produce an informal offer in the first place. These fees are typically non-refundable and are not deducted from the eventual premium, even if the extension goes ahead.
The freeholder isn’t bound to see it through
Nothing obliges a freeholder to complete an informal extension once started. They can pause, stall, or abandon the process at any point, for any reason — leaving you to absorb whatever time and cost you’ve already committed.
You’ll need lender consent — at an extra cost
Changing your lease terms informally means your mortgage lender must consent before anything can complete. Lenders require this to make sure the changes don’t weaken their security over the property. Your solicitor can arrange this, but it comes with an additional fee that simply doesn’t arise under the statutory process.
There’s no fair basis for the premium
Because there’s no statutory formula behind an informal offer, the freeholder can propose whatever figure suits them, with no requirement to show their working or demonstrate it’s reasonable.
Common Terms to Watch Out For
Beyond the process itself, the terms of the offer deserve close scrutiny:
Escalating or retained ground rent
- Rent that doubles every 10–15 years
- Rent linked to inflation (e.g. RPI)
These clauses make a flat harder to sell and harder to mortgage.
A shorter extension than you’re entitled to
- Less than the 90 years you’d get statutorily
- May do little to improve resale value or mortgageability
New fees, covenants, or restrictions
- Administration charges not previously payable
- New obligations that weren’t in your original lease
Case Study: An Informal Offer Gone Wrong
Mark received an informal offer from his freeholder to extend his 78-year lease by 90 years. The premium looked reasonable — but the existing ground rent, which doubled every 25 years, was carried over into the new lease.
The deal looked fine on paper. But when Mark came to remortgage, his lender rejected the application because of the escalating ground rent clause. He had to renegotiate, taking on further legal and surveyor fees, and ultimately paid more than if he’d gone the statutory route from day one.
How the Statutory Route Compares
| Feature | Statutory | Informal |
| Lease length | 90 years added, guaranteed | Varies, often less |
| Ground rent | Reduced to £0 (peppercorn) for the whole new term | Often retained until expiry of the original term, then down to a peppercorn for the extended period |
| Premium basis | Set valuation methodology | Whatever the freeholder proposes |
| Legal protections | Strong, statute-backed | Minimal |
| Dispute resolution | Tribunal | None, unless you switch to the formal process |
| Freeholder obligation to proceed | Must respond and progress | Can withdraw at any time |
| Upfront fees | Structured, tied to the process | Often non-refundable, payable just for an offer |
| Mortgageable | Always, no lender consent required | Lender consent required, sometimes rejected |
Under the statutory route, your freeholder must respond to your notice, cannot impose hidden clauses, and cannot retain ground rent — and if you can’t agree the premium, you can refer the matter to the Tribunal for an independent decision.
What Should You Do If You’ve Received an Informal Offer?
Step 1: Don’t sign anything yet
However attractive it looks, hold off until you’ve had professional advice.
Step 2: Get a valuation
A RICS-accredited surveyor can tell you whether the premium being proposed is actually fair — something you can’t assess on your own, given there’s no set formula behind it.
Step 3: Consult a leasehold solicitor
A specialist solicitor will review the terms, flag red flags like escalating ground rent or unusual covenants, and explain your options clearly.
Step 4: Consider serving a Section 42 notice
If the offer is poor, stalls, or simply doesn’t sit right, serving a statutory notice switches you onto the formal route — with all of its protections.
Can You Negotiate an Informal Offer?
You can try — but the freeholder is under no legal obligation to negotiate, and there’s no independent mechanism to challenge the figures if they refuse to move. Some leaseholders do secure improvements: a longer term, reduced ground rent, better clauses. But even with successful negotiation, you’re still relying on the freeholder’s goodwill rather than a legal framework — which is why the statutory route remains the safer option in almost all cases.
FAQs
Can I start informally and switch to the statutory process later?
Yes — but if informal negotiations stall, your solicitor will need to start the statutory process from scratch. Some freeholders, particularly councils, won’t engage informally at all, so you may not have a choice either way.
Will lenders accept informal extensions?
Sometimes — but only where the terms are genuinely favourable (e.g. no ground rent). Escalating or onerous terms can lead to mortgage refusals, and you’ll need to factor in the cost of obtaining lender consent regardless.
Why do informal offers often look cheaper upfront?
Because they often include ongoing income for the freeholder, such as retained ground rent. Over the life of the lease, this usually ends up costing more than the statutory route.
Are informal extensions quicker?
Sometimes, but not reliably. If the terms turn out to be unfair, or the freeholder stalls or walks away, disputes and delays can end up taking longer than the statutory timeline would have.
When to Consider Informal — and When Not To
Only consider an informal offer if:
- You’re confident about the terms as presented
- A surveyor has confirmed the premium is fair
- A solicitor has reviewed the full lease and found nothing concerning
Avoid an informal offer if:
- Your lease is approaching the 80-year mark (marriage value risk)
- The ground rent increases or is retained
- You’re planning to sell or remortgage soon
- You’re not prepared to walk away from upfront costs if it falls through
Ready to Protect Your Investment?
If you’ve received an informal offer, don’t rush into it. At Extension.Lease, we help leaseholders assess offers, understand the real risks behind them, and where appropriate, move confidently onto a secure statutory lease extension that protects your property’s value.
