Leasehold Property law. Personally delivered.
Leasehold Property law. Personally delivered.
Extending a term by deed of variation creates a new lease by operation of law — with consequences for ground rent, tax and your mortgage.
Reviewed 25 July 2026
It is the most expensive mistake in this area, and it is made by putting the wrong words at the top of the document.
A variation that extends the term of a lease, or increases the extent of what is demised, operates as a surrender of the existing lease and the grant of a new one. It does not matter what the parties call it or what the heading says. The old lease ends; a new lease comes into existence on the date of the deed; the old leasehold title is closed and a new one opens.
The lease date changes, so priority, registration and the position of any guarantor follow the new lease rather than the old one.
Ground rent may be caught. A new long residential lease granted since June 2022 must be at a peppercorn for the extended term, and the restriction applies to a surrender and regrant whether or not a premium is charged. A landlord expecting to preserve an income stream can lose it by agreeing to what looked like a variation.
Stamp duty land tax on a surrender and regrant is calculated differently from duty on a variation, and overlap relief may or may not be available.
And your mortgage does not move by itself. The lender must consent and a deed of substituted security is required, without which HM Land Registry will not register the new lease. That commonly adds several weeks. On a statutory lease extension none of it applies, because section 58(4) of the 1993 Act transfers the charge automatically.
Does it touch the term? Any lengthening is a surrender and regrant. Does it change what is demised — a loft, a store, a strip of garden? Also a surrender and regrant. If neither, it is a true variation: rent, service charge, repairing obligations, user covenants and rights over land the landlord keeps can all be varied without disturbing the lease itself.
A surrender and regrant is frequently exactly the right document. The mistake is arriving at one by accident, in a deed drafted as a variation, with nobody having considered the rent, the tax or the lender.
Send us the draft before it is signed. Establishing which document you actually need is the first hour's work, not the third month's.
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This article reflects our understanding of the position on 25 July 2026 and is general information rather than legal advice. The law in this area is changing: take advice on your own circumstances before relying on it.
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