Nobody can force you to apply for a leasehold extension. The law doesn’t insist that you apply for one and you won’t get prosecuted or sued for letting it run down and expire.
However from a sensible perspective, depending on the remaining length of your current lease, you certainly would be well advised, preferably by a specialist solicitor, to apply for a lease extension.
Buyers avoid properties with leases that have less than 90-95 year to run – fact!! If you delay applying for a lease extension until your existing lease has less than 80 years to run you will incur the additional cost of the Marriage Value – fact! Mortgage providers are reluctant to agree to finance the purchase of properties with leases with less than 70 years to run – fact! If you let your lease run out completely you will find yourself in the unenviable position on being an ‘assured tenant’ with no lease to sell or extend and with all the loss of security that such a status entails – fact!
You would even be strongly advised to apply for a leasehold extension if you are in the ideal situation of your original lease having just over 95 years to run, for if you apply promptly for and are granted a leasehold extension your lease will then have an additional 90 years added to it, your house will retain its saleability and be perceived as more valuable than the property with a lease that hasn’t been the subject of a lease extension. You will also crucially avoid the additional cost of the Marriage Value.
Yes, you do need to apply for a lease extension and quickly, if your property has a lease with just over 80 years to run. You might well have seen it becoming less attractive to potential buyers should you have been attempting to sell, but you will have not yet crossed that critical less than 80 years remaining on your lease point and a prompt application for a leasehold extension would yet see you avoid incurring the additional and avoidable cost of the Marriage Value. The Marriage Value is based on the legally required 50/50 division between the leaseholder and the landlord of the ‘profits’ from an assumed increase in the value of the property due to its having an extension to its lease.
In the UK the calculation of this assumed increase in value is unavoidably subjective, based on local knowledge and market factors and in the hands of professional surveyors. It can amount to a considerable sum of money and so awareness of the necessity for applying for your lease extension prior to the lease having less than 80 years to run can result in an enormous cost saving.
Utilising the advice of an expert solicitor and surveyor from the outset of any application you to make for a lease extension would immeasurably increase the chances of an equitable agreement regarding the marriage value or if advice was sort before the lease had less than 80 years to run, avoidance of the Marriage Value altogether, particularly in the rare circumstances when a less than scrupulous landlord attempts to protract leasehold extension negotiations until the lease has less than 80 years to run in order to make the Marriage Value operative.