The cost of a lease extension is made up of the premium you pay the landlord for the longer lease, plus professional fees: your valuer, your solicitor and the landlord’s reasonable valuation and legal costs, which you normally pay too. The premium is by far the largest part, and it depends mainly on how many years are left on your lease, the ground rent and the value of your flat.
This guide explains how the premium is worked out, what else you pay for, why the 80-year point matters and how to keep the overall cost down. It covers flats in England and Wales extended under the statutory route.
What makes up the cost of a lease extension?
| Cost | What it is |
|---|---|
| The premium | The price paid to the landlord for the extended lease. The largest part of the total. |
| Your valuer’s fee | For a lease extension valuation that tells you what premium to offer. |
| Your solicitor’s fee | For serving the formal notice, dealing with the landlord and completing the new lease. |
| The landlord’s reasonable costs | Under the statutory route you normally pay the landlord’s reasonable valuation and legal costs. |
| Other costs | Land Registry fees, any Stamp Duty Land Tax due on a large premium, and a management company’s costs if it is a party to the lease. Your solicitor will confirm these. |
How is the lease extension premium calculated?
Under the statutory route, the premium compensates the landlord for what they lose by granting a longer lease. It is made up of:
- Loss of ground rent. A statutory extension reduces the ground rent to a peppercorn (in practice, nothing), so the landlord is compensated for the ground rent they will no longer receive. The valuer capitalises the remaining ground rent to find its present value.
- Loss of the reversion. When a lease ends, the flat reverts to the landlord. Extending the lease pushes that date far into the future, which reduces the value of the landlord’s interest. The valuer works this out by discounting the flat’s future value back to today, using a deferment rate.
- Marriage value, where the lease has 80 years or less left. A flat with a long lease is worth more than the same flat with a short one. Marriage value is that increase in value created by the extension, and the landlord is entitled to half of it. Where more than 80 years remain, marriage value is ignored.
To calculate these, the valuer needs the value of your flat with its current lease and with a long lease, the unexpired term, the ground rent and any rent reviews. Improvements you have made, such as a new kitchen or an extension, are disregarded, so you do not pay the landlord for the value you added.
What affects how much the premium will be?
- Years left on the lease. The shorter the lease, the higher the premium, and it rises faster once marriage value applies below 80 years.
- The ground rent. A high or rising ground rent is worth more to the landlord, so it increases the premium.
- The value of the flat. A higher-value flat means a higher premium for the same lease length.
- Relativity. How much less a short-lease flat is worth than a long-lease one. This is often the most disputed part of a valuation and is a matter for the valuer’s judgement and the market evidence.
- Your improvements. These are left out of the valuation, which can reduce the premium.
Why does the 80-year point matter?
Once your lease falls to 80 years or less, marriage value becomes payable and the premium can rise sharply. Extending while more than 80 years remain avoids marriage value altogether. If your lease is getting close to 80 years, getting a valuation now can save a significant amount.
A short lease also affects the flat itself: many lenders are reluctant to lend on short leases, which can make the flat harder to sell or remortgage.
Is the law changing?
The Leasehold and Freehold Reform Act 2024 changes how lease extension premiums are calculated, including removing marriage value, and allows much longer extensions. Those changes only apply once the relevant parts of the Act are in force. The rules that apply to your claim are the ones in force on the date your claim is made, so your valuer will confirm which basis applies before you serve notice.
One change already in force means you no longer need to have owned the flat for two years before you can claim a statutory extension.
How much does a lease extension valuation cost?
Our lease extension valuation fee starts from £725 for properties worth up to £400,000. This is our fee only, not the premium or the landlord's costs. All fees include VAT.
A lease extension valuation tells you the premium to propose in your formal notice and the range you should be prepared to agree. It is the most important step, because the figure in the notice sets the starting point for negotiation.
Statutory or informal lease extension?
You can ask your landlord for an informal extension instead of using the statutory route. It can be quicker, but the landlord can set the terms, which may include keeping or increasing the ground rent, a shorter extension or a higher premium, and you have no right to a tribunal if you cannot agree.
The statutory route adds 90 years to the existing lease, reduces the ground rent to a peppercorn and gives you the right to apply to the tribunal if the premium cannot be agreed. Take advice before accepting informal terms.
How does the statutory process work?
- Get a valuation. Your valuer works out the premium and a sensible negotiating range.
- Serve notice. Your solicitor serves a formal notice (a section 42 notice) on the landlord, proposing the premium.
- Landlord’s response. The landlord replies with a counter-notice by the date given in your notice, which must be at least two months away. They usually propose a higher premium.
- Negotiate. The two valuers negotiate the premium. Many claims are settled at this stage.
- Tribunal, if needed. If the premium or terms cannot be agreed, you can apply to the First-tier Tribunal (Property Chamber) in England, or the Leasehold Valuation Tribunal in Wales, within the time limits set by law.
- Complete. The new lease is completed and registered at HM Land Registry.
How can you keep the cost down?
- Extend before the lease falls to 80 years.
- Get an independent valuation before you make any offer, so you know what a fair premium is.
- Keep a record of improvements you have made, so they can be disregarded.
- Use the statutory route if the informal terms are not clearly better.
Lease extension cost: frequently asked questions
Are online lease extension calculators accurate?
They can give a rough idea, but they rely on general assumptions about value and relativity. The premium depends on your flat, your lease and current market evidence, so a formal valuation is needed before you serve notice.
Do I have to pay the landlord’s costs?
Under the statutory route you normally pay the landlord’s reasonable valuation and legal costs. You do not normally pay their costs of a tribunal hearing.
How long does a lease extension take?
Under the statutory route, the landlord has at least two months to respond to your notice, and negotiations take further time after that. If the matter goes to the tribunal, it takes longer.
Can I extend my lease if I have just bought the flat?
Yes. The requirement to have owned the flat for two years before claiming a statutory extension has been removed.
Does a lease extension include the ground rent?
A statutory extension reduces the ground rent to a peppercorn, meaning in practice you pay none. The loss of ground rent is one of the parts of the premium.
This guide is general information about the statutory lease extension process for flats in England and Wales, based on the Leasehold Reform, Housing and Urban Development Act 1993 and the Leasehold and Freehold Reform Act 2024. It is not legal advice; your solicitor will advise on your lease and your claim.
Further reading: Do I need a survey on a leasehold flat? · Who is responsible for the roof in a leasehold flat?
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