What is the difference between lease renewal and lease extension?
Most people, who are at the end of their lease term, encounter two words that seem to mean the same – extension or renewal? Many people, including judges and some professionals, confound this term as a lease extension with a lease renewal. Almost all leaseholders have the right to extend the lease term beyond the end of the initial term. In this article, we will describe whether there is a difference in these options
In very basic layman’s language lease renewal is a new lease but with the majority of the terms remaining the same. There may be some changes though, for example, to modify the lease terms. Lease extension is used to mean that you are extending the term of your lease (perhaps by the statutory 90 years or some other length) with the main terms of the lease remaining intact. However, even in lease extension you can alter some terms. So in essence, lease renewal and lease extension are the same thing (as far as leasehold valuations are concerned) but some people use the two phrases interchangeably.
A lease extension still requires a completely new lease to be drawn up although in most cases the only thing that is changing is the end date of the lease.
The parties need to sign a brand-new lease from a legal perspective in order to renew a lease. A lease extension extends the term, which usually includes the terms of the existing lease.
If you’re left with around 83 years on the lease-end period we would certainly suggest that you look for more professional and legal advice. As with an expert solicitor, you will get help to decide what you should do to renew or extend your lease.