Important Disclaimer

This calculator is for general guidance only*.

Lease Extension Knowledge Base

Understanding Lease Extensions: Why They Matter

As a leaseholder, the number of years remaining on your lease is a critical factor affecting your property’s value and marketability. If your lease is dropping below 90 years, extending it becomes increasingly important to:

Protect your property’s value from depreciation
Enhance marketability for potential buyers
Improve mortgage options as lenders prefer longer leases
Secure your long-term investment in the property

Once a lease falls below 80 years, the cost of extending increases significantly due to what’s known as “marriage value” – a legal concept that represents the increase in property value resulting from the lease extension, which must be shared with the freeholder.

The Lease Extension Process Explained

Statutory Route (Under the Leasehold Reform, Housing and Urban Development Act 1993)

Qualifying leaseholders have the legal right to extend their lease by 90 years (for flats) or 50 years (for houses) and reduce ground rent to zero. To qualify, you must:

Have owned the property for at least 2 years
Have a lease that was originally granted for more than 21 years

The statutory process involves:

Initial Notice: Serving a formal Section 42 notice on the freeholder
Counter-Notice: The freeholder responds with their proposed premium
Negotiation: Both parties’ valuers negotiate the final premium
Agreement or Tribunal: If negotiations fail, the case proceeds to the First-tier Tribunal
Completion: New lease is granted once terms are agreed

Informal Route

You may also approach your freeholder directly to negotiate a lease extension outside the statutory process. While potentially faster, this approach lacks statutory protections and might result in:

Less favorable terms
Continued or increased ground rent
Fewer years added to the lease

How Our Lease Extension Calculator Works

Our calculator provides an estimate based on three key components that determine lease extension premiums:

1. Ground Rent Loss

This compensates the freeholder for future ground rent they will no longer receive. The calculation uses:

Your current annual ground rent
Years remaining on the lease
A capitalization rate (typically 5-7%)

2. Reversionary Interest

This represents the freeholder’s right to take back possession of the property when the lease expires. The calculation considers:

The property’s current value
Years remaining on the lease
A deferment rate (typically 4.75-5.25% for houses, 5-6% for flats)

3. Marriage Value

Applicable when leases have less than 80 years remaining, this represents the increase in the property’s value resulting from the lease extension. The calculation includes:

The property’s value before extension
The property’s value after extension
The share of this increase (50%) that goes to the freeholder

Factors Affecting Lease Extension Costs

Several factors can significantly impact your lease extension premium:

Lease Length Remaining

Over 80 years: Lower premiums, no marriage value
Under 80 years: Higher premiums due to marriage value
Under 60 years: Substantially higher premiums
Under 30 years: Extremely high premiums

Ground Rent Terms

Peppercorn (nominal) rent: Minimal impact on premium
Fixed ground rent: Moderate impact depending on amount
Escalating ground rent: Significant impact, especially with doubling clauses

Property Value

Higher-value properties typically face higher extension costs, as the calculations are directly linked to property value.

Freeholder’s Approach

Some freeholders are more reasonable than others. Institutional freeholders often follow standard valuation methods, while individual freeholders may vary in their approach.

Beyond the Calculator: Professional Valuation

While our calculator provides a useful estimate, several factors may affect your actual premium:

Property-specific factors not captured in standard calculations
Local market conditions affecting property values
Freeholder’s valuation approach and negotiation stance
Tribunal precedents relevant to your property type and location

For this reason, we recommend obtaining a professional valuation from a specialist surveyor with experience in lease extensions in your area.

Legal Assistance With Lease Extensions

Connaught Law provides comprehensive support throughout the lease extension process:

Initial Assessment

Determining your eligibility for a statutory lease extension
Reviewing your existing lease for potential issues
Advising on the most suitable approach for your circumstances
Providing a realistic timeframe and cost estimate

Statutory Process Management

Preparing and serving the initial Section 42 notice
Checking and responding to the freeholder’s counter-notice
Coordinating with your valuer during negotiations
Representing you at the First-tier Tribunal if necessary
Completing the lease extension with the Land Registry

Premium Negotiation

Our solicitors work closely with experienced valuers to:

Challenge unreasonable demands from freeholders
Negotiate favorable terms within the statutory framework
Achieve the lowest possible premium
Ensure lease terms are fair and compliant with regulations

Frequently Asked Questions

Can you help reduce the premium quoted by my freeholder?

Yes. We specialize in negotiating lease extensions, aiming to reduce the premium payable to your landlord. Our solicitors work closely with professional surveyors, ensuring that you pay a fair market rate rather than an inflated one.

Do you represent clients at Leasehold Valuation Tribunals?

Yes. If an agreement cannot be reached amicably, Connaught Law is fully equipped to represent you at a First-tier Tribunal (Property Chamber). Our solicitors have a strong track record in achieving favorable outcomes in lease extension disputes.

How long does a lease extension typically take?

The statutory process typically takes 3-6 months if negotiations proceed smoothly. If the case goes to Tribunal, it may take 9-12 months. Informal agreements can sometimes be completed more quickly.

What are your fees for lease extension work?

Our pricing is transparent and competitive. While costs depend on the complexity of your case, we provide a clear fee structure at the outset. Your initial consultation is provided without obligation, giving you a clear understanding before committing.

Should I extend my lease now or wait until I sell?

Extending before selling is usually advantageous as:

You can market the property at a higher value
More buyers will be interested (especially those needing mortgages)
You avoid the 2-year ownership requirement being passed to the buyer
The cost will likely increase the longer you wait

Can my freeholder refuse to extend my lease?

Under the statutory route, freeholders cannot refuse a lease extension to qualifying leaseholders. They can only negotiate on the premium and challenge your eligibility if they believe you don’t qualify.

*Important Disclaimer

This calculator provides a general estimate only, based on industry standard calculations. The actual premium may vary significantly based on:

The specific terms of your existing lease
Your freeholder’s valuation methods
Local property market conditions
Recent tribunal decisions affecting valuation methods

The estimate should be used for initial budgeting purposes only. Before proceeding with a lease extension, we strongly recommend:

Consulting with a specialist lease extension solicitor
Obtaining a professional valuation from a surveyor experienced in lease extensions
Assessing all potential costs beyond the premium (legal fees, valuation fees, Land Registry fees)

No action should be taken based solely on this calculator’s results without seeking professional advice tailored to your specific circumstances.