If you own a leasehold flat, the length of your lease is one of the most important numbers attached to your property. A lease starting to tick down below 90 years can affect your mortgage, your saleability, and ultimately the price you can achieve when you sell. Below 80 years, the financial cost of extending escalates sharply. This guide explains how lease extension works in England and Wales, what it costs, and how to approach it.
Why Lease Length Matters
When you buy a leasehold property, you are purchasing the right to occupy it for the remaining term of the lease — after which ownership reverts to the freeholder. In practice, leases are extended well before they expire, but short leases carry real practical problems:
The 80-year cliff. When a lease drops below 80 years, a concept called marriage value kicks in. Marriage value is the additional value created by merging the leaseholder's and freeholder's interests — and under the Leasehold Reform Housing and Urban Development Act 1993, the freeholder is entitled to 50% of the marriage value as part of the extension premium. This can significantly increase the cost of extending. A lease at 79 years can cost substantially more to extend than one at 81 years.
Mortgage refusal. Most mainstream mortgage lenders require a minimum lease term — typically at least 70–85 years at the time of application, with many requiring the lease to have at least 70–80 years remaining after the mortgage term ends. In practice, this means leases falling below 70 years become difficult or impossible to mortgage, severely restricting your pool of buyers.
Saleability. Even where a mortgage is technically possible, many buyers are deterred by short leases. Conveyancers will flag the issue, surveys will note it, and buyers may demand a price reduction or walk away entirely.
The bottom line: if your lease is below 90 years, you should seriously consider extending. If it's below 80 years, you should act without delay.
Two Routes to Extension
There are two routes available to qualifying leaseholders in England and Wales:
1. Informal Negotiation
You can approach your freeholder at any time and negotiate an extension on whatever terms you can agree. The advantage is speed and flexibility — there is no prescribed process, no mandatory 2-year ownership period, and no requirement to follow the statutory premium calculation. The disadvantage is that the freeholder can set the price and terms as they see fit, and you have no legal right to proceed if they refuse.
Informal extensions are often used by leaseholders who do not yet qualify for the statutory route (e.g. they have owned for less than 2 years) or where the freeholder is a cooperative landlord. Always have the terms reviewed by a specialist solicitor before agreeing.
2. The Statutory Route
The Leasehold Reform Housing and Urban Development Act 1993 gives qualifying leaseholders the legal right to extend their lease. The freeholder cannot refuse. The terms — length, ground rent, and premium — are governed by the Act.
Since the Leasehold Reform (Ground Rent) Act 2022, any new lease granted on or after 30 June 2022 must be at a peppercorn (nil) ground rent. This applies to statutory lease extensions, meaning you can extend your lease to 990 years at zero ground rent.
Eligibility for the Statutory Route
To qualify:
- You must have owned the leasehold for at least 2 years (registered as owner at Land Registry)
- The original lease must have been granted for a term of more than 21 years
- The property must be a flat (the 1993 Act does not cover houses — houses are covered by the Leasehold Reform Act 1967, which provides different rights)
- You must not own more than 2 leasehold properties in the same building
Most leasehold flat owners qualify.
The Statutory Process: Step by Step
Step 1 — Instruct a specialist solicitor and RICS surveyor. Before serving any notice, get a valuation of the premium from a surveyor experienced in leasehold enfranchisement, and instruct a solicitor specialising in lease extension.
Step 2 — Serve a Section 42 Notice. Your solicitor serves a formal Section 42 Notice on the freeholder (and any intermediate landlords). The notice sets out the proposed premium, the proposed terms of the new lease, and a response deadline (usually 2 months). The premium you propose in the notice should be based on your surveyor's valuation.
Step 3 — Freeholder's Counter-Notice. The freeholder has 2 months to serve a Counter-Notice either accepting your terms, proposing different terms, or (in limited circumstances) asserting that they wish to redevelop the building (a ground that is rarely available and must be exercised carefully). In practice, most freeholders propose a higher premium in their Counter-Notice.
Step 4 — Negotiation. The parties' surveyors negotiate on the premium. Most cases are resolved at this stage without going to tribunal.
Step 5 — First-tier Tribunal (Property Chamber). If the parties cannot agree, either party can apply to the First-tier Tribunal (Property Chamber) to determine the premium. The tribunal applies the statutory valuation methodology. Costs can escalate at tribunal, so most cases settle beforehand.
Step 6 — Completion. Once the premium and terms are agreed (or determined), the new lease is granted and registered at Land Registry.
Total timescale: typically 3–12 months from serving the Section 42 Notice.
How the Premium is Calculated
The statutory premium under the 1993 Act comprises three elements:
- Capitalised ground rent — the present value of the ground rent the freeholder will lose
- Reversion value — the present value of the freehold interest reverting at the end of the extended lease (discounted at a deferment rate, typically around 5%)
- Marriage value — 50% of the increase in the combined value of the leasehold and freehold interests created by the extension. This element only applies if the lease has fewer than 80 years remaining
The calculation is complex and depends on the ground rent, the property's open market value, the deferment rate, and the years remaining. This is why a specialist RICS surveyor is essential — their valuation sets the basis for negotiation and, if necessary, tribunal.
SDLT (Stamp Duty Land Tax) may be payable on the lease extension premium if it exceeds the SDLT threshold (£250,000 in England as of 2025, £0 for first-time buyers). In most cases, the premium is below the threshold and no SDLT is due, but confirm this with your solicitor.
What It Costs: Ballpark Guide
| Years remaining on lease | Typical premium (£200k flat, London) | Premium (£200k flat, regional) |
|---|---|---|
| 90 years | £4,000–£8,000 | £2,000–£5,000 |
| 80 years | £8,000–£15,000 | £4,000–£9,000 |
| 70 years | £15,000–£30,000 | £8,000–£18,000 |
| 60 years | £30,000–£55,000 | £16,000–£35,000 |
| 50 years | £55,000–£100,000+ | £30,000–£70,000 |
These are illustrative ranges only. Actual premiums depend on property value, ground rent, location, and the specific valuation methodology applied.
Professional costs (on top of premium):
- Specialist solicitor: £1,500–£3,000 (your costs)
- RICS leasehold enfranchisement surveyor: £500–£1,500 (your costs)
- Freeholder's reasonable costs: £500–£2,000 (you pay these too, as required by the 1993 Act)
- Land Registry registration fee: £20–£500 (depending on property value)
Total additional professional costs: approximately £2,500–£6,500, on top of the premium.
Share of Freehold as an Alternative
If your building has multiple flats and at least half the leaseholders want to participate, collective enfranchisement (buying the freehold together) may be worth exploring. Under the 1993 Act, qualifying leaseholders can collectively compel the freeholder to sell the freehold at a price set by the Act. Once you own the freehold jointly (through a company), you can all extend your leases to 999 years at a peppercorn ground rent, typically at minimal cost.
Collective enfranchisement involves higher upfront legal costs (typically £3,000–£8,000 in total legal fees) but can be more economical per flat in a large block and eliminates ongoing ground rent and freeholder control.
Practical Summary
- Check your lease term at Land Registry (title register) — it's free to view online
- If below 90 years, get a valuation from a RICS-accredited leasehold surveyor
- Do not delay below 80 years — marriage value substantially increases the premium
- Instruct a specialist solicitor before serving any notice
- Use the statutory route if you qualify — it gives you legal certainty the freeholder cannot refuse
- Budget for both the premium and professional costs (typically £2,500–£6,500 on top)
Key references:
- Leasehold Advisory Service (LEASE): lease-advice.org — free, government-funded guidance
- RICS: rics.org (find a surveyor with leasehold enfranchisement experience)
- Leasehold Reform Housing and Urban Development Act 1993
- Leasehold Reform (Ground Rent) Act 2022
For a complete walkthrough of the statutory process, marriage value calculations, and the Leasehold Reform Act 2022 peppercorn ground rent changes, see our complete guide to extending a lease in England and Wales.