A lease extension is the legal process of increasing the years remaining on your leasehold property. By extending the lease, you preserve the property's value and maintain its marketability.
When you own a leasehold property, you have the right to live in the property for a fixed period as specified in the lease agreement. As that period shortens, your property loses value and becomes harder to sell or remortgage.
This guide explains when you should extend your lease, how the process works, what it costs and what problems you might encounter.
When should you extend your lease?
The ideal time to extend your lease is between 85-90 years remaining. Here's what happens at different thresholds:
85-90 years remaining: the sweet spot
- No marriage value to pay (explained below)
- Mortgage lenders will still lend
- Property remains attractive to buyers
- Extension costs are at their lowest
80 years remaining: costs increase significantly
When your lease drops below 80 years, "marriage value" applies. This is the increase in your property's value after extension, and you must pay the freeholder 50% of this increase.
Example: An extension at 85 years might cost £8,000. The same extension at 75 years could cost £15,000+ due to marriage value.
70 years remaining: mortgage problems begin
Most lenders refuse mortgages on properties with less than 70 years remaining. This drastically reduces your pool of potential buyers.
60 years remaining: serious value loss
Your property becomes very difficult to sell. Extension costs can be £20,000-£30,000+ depending on property value.
Below 60 years: emergency territory
Extension costs can exceed 20% of your property's value. Some properties become virtually unsaleable.
Our advice: Don't wait for your lease to become a problem. Extend at 85-90 years to avoid marriage value and keep costs manageable.
How does a lease extension work?
The statutory lease extension process involves six main steps:
Step 1: Check your eligibility
To qualify for a statutory lease extension, you must have owned the property for at least two years. The lease must have originally been granted for more than 21 years.
What if you've owned it for less than 2 years? You can negotiate an informal extension with your freeholder, but you won't have statutory protection. Alternatively, ask the seller to extend the lease before you complete the purchase.
Step 2: Get a professional valuation
You'll need a RICS-qualified surveyor experienced in lease extensions. They'll value:
- Your property's current market value
- The diminution in the freeholder's interest
- The value of lost ground rent
- Marriage value (if under 80 years)
Surveyor fees typically cost £500-£1,500 depending on property value and complexity.
Step 3: Serve the Section 42 notice
This is the formal legal notice to your freeholder stating your intention to extend. It must include:
- Your proposed premium (how much you're offering)
- Your proposed lease terms
- A deadline for the freeholder to respond
Important: The Section 42 notice must be perfectly accurate. Any errors can invalidate it and you'll have to start again. This is why you need a specialist lease extension solicitor.
Your freeholder has 2 months to respond with a counter-notice.
Absent freeholder? You can trace them through Land Registry records. If they still can't be found, there's a legal process to proceed without them.
Step 4: Negotiate the terms
Your freeholder will almost always counter-offer with a higher premium. Typical negotiation takes 2-4 months.
Your solicitor will negotiate on your behalf, supported by your surveyor's valuation. Most extensions settle through negotiation without going to tribunal.
Can't agree? You can apply to the First-tier Tribunal (Property Chamber) who will determine a fair premium.
Step 5: Complete the legal paperwork
Once terms are agreed, your solicitor will:
- Prepare the new lease documentation
- Arrange for you to pay the premium
- Register the new lease with Land Registry
- Handle payment of the freeholder's reasonable legal costs (yes, you pay these too)
Step 6: Registration
The new extended lease is registered with HM Land Registry. You'll receive confirmation and updated lease documentation.
Total timeline: 6-12 months from start to finish, though some complete faster and complex cases can take 18 months.
How much does a lease extension cost?
Total costs typically range from £8,000 to £25,000+ depending on your property value, remaining lease and ground rent.
The premium (what you pay the freeholder)
This is calculated based on:
Diminution in value: What the freeholder loses by extending your lease
Lost ground rent: The future income the freeholder loses
Marriage value: If under 80 years, 50% of the increase in property value (this is the expensive bit)
Professional fees you'll pay
- Your surveyor: £500-£1,500
- Your solicitor: £600-£2,000
- Freeholder's legal costs: £1,000-£2,000 (yes, you pay these)
- Freeholder's surveyor: £500-£1,000 (you pay this too)
- Land Registry fee: £40
Worked example
£300,000 flat, 75 years remaining, £150 ground rent:
- Diminution: £4,500
- Lost ground rent: £2,500
- Marriage value: £9,000
- Premium: £16,000
Plus professional fees: £3,000-£5,000
Total: £19,000-£21,000
The same extension at 85 years (no marriage value): approximately £10,000-£12,000 total.
Statutory vs informal lease extension
Statutory route (Section 42)
Pros:
- Legal right - freeholder can't refuse
- Protected by law
- Set process and timelines
- Can go to tribunal if needed
- Standard 90 years added (not negotiable)
- Ground rent reduced to peppercorn
Cons:
- Slower (6-12 months minimum)
- Must have owned for 2 years
- Formal process with strict requirements
- More expensive legal fees
Informal route
Pros:
- Faster (can complete in 2-4 months)
- No 2-year ownership requirement
- Can negotiate different terms
- Potentially cheaper if freeholder cooperative
Cons:
- No legal protection
- Freeholder can refuse or demand unreasonable terms
- May not get full 90 years or peppercorn ground rent
- Could end up paying more
When to use each route
Use informal route when:
- You've owned for less than 2 years
- Freeholder is known to be reasonable
- You need to complete quickly (e.g. before selling)
Use statutory route when:
- You qualify (2+ years ownership)
- Freeholder is difficult or absent
- You want maximum protection
- You want the full 90 years + peppercorn rent
Common lease extension problems
Absent or untraceable freeholder
Many freeholders are offshore companies or can't be located. Your solicitor can:
- Search Land Registry records
- Check Companies House
- Use tracing services
- Apply for a vesting order if freeholder can't be found
Unreasonable freeholder demands
Some freeholders demand excessive premiums or refuse to negotiate. Options:
- Counter with your surveyor's valuation
- Apply to tribunal to determine fair premium
- Consider buying the freehold instead (if you qualify)
Ground rent escalation clauses
Older leases may have ground rent that doubles every 10-15 years. Watch for:
- "Doubling" clauses (£100 becomes £200, then £400...)
- RPI-linked increases
- Fixed percentage increases
These make extensions more expensive. Your surveyor will factor this in.
Disputes over valuation
Freeholder's surveyor values higher than yours. This is normal. Your solicitor will negotiate a middle ground or apply to tribunal.
Multiple leaseholders, one freeholder
In a block of flats, coordinate with other leaseholders. You might be able to:
- Negotiate group discount on surveyor fees
- Buy the freehold collectively instead
- Share legal costs
Buying a property with a short lease
Can you extend immediately?
No. You must own the property for 2 years before you have the statutory right to extend.
Options when buying a short lease property
- Ask the seller to extend first - negotiate a lower purchase price to account for extension costs
- Agree a price reduction - calculate extension costs and reduce offer accordingly
- Informal extension after purchase - negotiate with freeholder (no 2-year wait)
Example
Property valued at £300,000 with 75 years remaining. Extension costs £18,000.
- Offer: £282,000 (£300,000 minus £18,000)
- After extending: property worth £300,000
- You've bought at market value accounting for the short lease
Warning: Factor in that you'll need to find £18,000+ for the extension costs within 2 years. Not all buyers have this available.
What's changing with leasehold reform?
The Leasehold and Freehold Reform Act 2024 received Royal Assent but most provisions aren't yet in force. Proposed changes include:
Easier extensions
- Simpler process
- Standard lease extension term increased to 990 years
- Ground rent reduced to peppercorn automatically
Lower costs
- Potential cap on ground rent for extensions
- Marriage value may be abolished (still under discussion)
- Freeholder's costs reform
More rights
- 2-year ownership requirement may be reduced or removed
- Easier to buy freehold
- Better protection from unreasonable charges
When will this happen?
Secondary legislation is needed before most changes take effect. Some provisions may come into force in 2025-2026.
Should you wait?
If your lease is below 85 years: no, don't wait. Marriage value increases your costs the longer you delay. Even if reforms reduce costs slightly, the delay could cost you more.
Check gov.uk for the latest updates on leasehold reform.
Ready to extend your lease?
Our specialist lease extension solicitors can guide you through the entire process.
What we do
- Fixed-fee service from £600
- Expert negotiation with freeholders
- Full legal process management
- Average completion: 7-8 months
Get a fixed-fee quote for your lease extension or all us on , we would happy to help answer any questions you may have.