Should I hang tight on lease extension?

What ever you decide to do, don't negotiate with the freeholder for a non formal extention. Always go the Statutory route to add 90 years.
Personally I'd wait a bit to see if the proposed 999 years will be on the table under the levelling up Leasehold reform the sector so badly needs.

I' agree with Glyn Jenkins about "waiting a bit" (perhaps up to 4 years in the case of the OP), but I'd love to know why he is so emphatic about not considering the informal route. Please, Glyn? Thanks!

I am currently extending a lease with 67 years on it. Simply as the is no guarantee any of these proposed legislation changes will take place or when. Also this flat (along with 2 others ) are D rated for EPC. So I want rid. Your not below 80 years so the ‘marriage’ clause does not effect it yet. Below 80 years gets more expensive. For same reason I am selling the 3 flats to avoid paying up to £14k a piece to be able to let them when (or if and I agree it may be changed by the time 2025 or 2028 arrives) EPC rules take effect. Unfortunate for the tenants and they are good ones of long standing but I am Norma going to get caught holding the baby. Another case of the government suggesting and putting forward these wonderful plans without considering the implications for tenants. To put it simply I am selling up. Sorry tenants but I am tired of being demonised by the media and seen as a cash cow by the government. Shelter can house my tenants now.

Leasehold Reform promised by this government is no guarantee nor is there a precise timetable, plus it is not looking at the reforms as a whole & therefore different aspects of reform will arrive at different times. The first is the Ground Rents Bill which has cross-party support and likely to get the Queen’s signature this Spring.
Other proposed reforms such as doing away with ‘marriage value’ are far more contentious and are likely to see lots of parliamentary arguments and delays with possible legal battles initiated by large wealthy freeholders (many of whom sit in or have friends in the House of Lords). The actual arrival of each tranche of reform is therefore very uncertain.
So far as short leases and lease extensions are concerned, there are a few proposals to note: The formula used to calculate the value of a lease extension premium is to be changed but the precise nature of those changes has not been detailed. It might be good for leaseholders, or worse. We just don’t know.
The statutory +90 years will be changed to +990 years but the burning question remains, will the new statutory extension premium be more expensive for leaseholders because they’re buying many more years?
Some of the elements of the proposed calculations such as deferment rates, yield rates etc may be ‘prescribed’ but we don’t know what those rates might be. The changes may be better for leaseholders, or maybe not.
There is a proposal to limit costs which is a good thing for leaseholders but until the government clarifies precisely what limits there are going to be, we cannot take a view on whether that will be better for leaseholders or not, and of course any limit that benefits leaseholders will be detrimental to freeholders and therefore will provoke strong opposition to the proposals and likely delay enactment.
With leases such as yours with 85 years remaining, you have the luxury of a few years to wait & see what unfolds, unlike leases below 80 years where delaying 2 or 3 years (or 2-3 months for very short leases) may see the premium increase more than the potential benefits of possible leasehold reform.
Who knows?
All you can know for sure is what exists today.
You could extend now whilst no marriage value exists & if Leasehold Reform is in your favour, you could still take advantage of it later on.
However, if your are not selling & your are intending to keep the property for your lifetime, you need to ask yourself “Do I need to extend the lease?” Extending a lease incurs costs which decreases your ‘profit’, so unless you may want to sell at some point or passing the property on in perpetuity to your offspring is a key driver, would it be better not to extend and keep the money in your bank account as you (and your children/grandchildren) can just take the profit for the next 85 years and give the flat back at the end of the term.
Just some things to think about that I too was once advised to consider by Bernie Wales, a far more knowledgeable person than I in such matters.

There is no harm in negotiating with the freeholder on an informal basis - other than it will cost you money and you won't have any guarantee of an extension at the end of it.

The leasehold reform proposals indicate the government is going to change the statutory extension from +90 years to +990 years ... but we have no details and I bet the extra +900 won't be free.

The proposals also indicate a change to the formula for calculating the extension premium - but we have no details of what those changes might be. They may prescribe the deferment rate, or the yield rate, or tweak marriage value - who knows.

In short, leasehold reform might be better ... or not ... if it ever arrives.

Your best course of action is to instruct a specialist leasehold lawyer (list here > https://www.alep.org.uk/find-a-practitioner ) and get him/her to serve the section 42 notice. You can still negotiate with the freeholder at that point - but you have the statutory timetable and process to ensure you get your extension.

Watch out for the Leasehold Reform (Ground Rents) Bill becoming law very soon. That will change the law to require new leases - including new lease tensions - to have a zero ground rent - whether using the formal or informal route.

Reply to the comment left by Ron H-W at 20/01/2022 - 11:38
Rather than me try to explain.Have a read of the Leasehold Knowledge," Informal lease extentions are pure poison" . Written by the late Louie Burns.

Thank you for this, Glyn.
I've just had a quick read of the item which (for the benefit of those whose "online hunting skills" are not of the best) can be found at
https://www.leaseholdknowledge.com/advice/informal-lease-extensions-are-pure-poison/

It seems the real poison is heavily-escalating ground rents in the extension (or, rather, new lease), which I do know has been commonplace but is currently under attack, see e.g.
https://www.theguardian.com/business/2021/sep/15/thousands-of-leaseholders-freed-from-doubling-of-ground-rents-countryside-properties-cma

But is it still a bad idea if the freeholder has said upfront "nil or peppercorn ground rent" AND "additional 90 years" ?

I'm in the same position as the OP apart from only one flat, and it's about 65 years left, and I am waiting to see what happens.

There are only 2 stages (at the moment) to the proposals, the first section (ground rents) has been dealt with in the current Parliamentary session (21/22) and the rest (which will include the reforms on how the marriage value is calculated) is scheduled for the next Parliamentary session (22/23), so I think it should be clearer what's happening in 12-15 months time.

I don't agree with the posters who are saying that it could turn out to be worse for leaseholders. The changes are guided by a Law Society review (see link below), and they propose 3 alternative ways forward in calculating how much the lease extension will cost, and the least favourable for leaseholders is to keep the marriage value as it is, hence I'd be surprised if it turned out that I was worse off for having waited.

To help you weigh the pros and cons of waiting, you can use the governments lease advice organisation's model (see link below) to model anticipated cost for different lengths of leases, under the current system.

https://communities.lawsociety.org.uk/property-news/law-commission-reports-on-reforming-leasehold/6001268.article

https://www.lease-advice.org/calculator/

Reply to the comment left by Ron H-W at 20/01/2022 - 15:15
From my understanding it can be, as certain things can be changed or added in the lease by the freeholder, obviously for an advatage in their own interests.

Having been on both sides of the fence. I would extend now. The cost will be relatively low because you have over 80 years left on the lease.
As for negotiating with the freeholder give him a ring then you will get a sense of whether he is reasonable or other.
The problems I have had extending is when you have an agent is between you and the freeholder. Every time I have spoken to the freeholder direct we have come to an agreement. You will always end up paying their solicitors fees but you can save on the surveyors fees.
Do your research first so you have an idea of the cost.
One freeholder sent me an offer after I requested an extension. It was in the parameters I was expecting but I phoned him anyway. I asked if we could negotaite and he gave me £2 000 off. He said most people don't ask.
Good luck.