Lease Extension Costs in England and Wales

A statutory lease extension costs the premium for the lease itself, plus your own legal and valuation fees, plus — under the law as it currently stands — the landlord's reasonable costs. The premium is the large and variable part, and the single biggest factor driving it is whether your lease has more or fewer than 80 years left to run.

Below 80 years, marriage value enters the calculation and the price jumps. Above 80 years, the statute says marriage value is nil. That threshold is the most important number in this guide.

This applies to England and Wales.

The right you are exercising

Section 39 of the Leasehold Reform, Housing and Urban Development Act 1993 gives a qualifying tenant of a flat

"the right, exercisable subject to and in accordance with this Chapter, to acquire a new lease of the flat on payment of a premium determined in accordance with this Chapter."

What you get is fixed by section 56: the landlord must grant

"a new lease of the flat at a peppercorn rent for a term expiring 90 years after the term date of the existing lease."

So a flat with 72 years remaining becomes a flat with 162 years remaining, and the ground rent drops to a peppercorn for the whole of it. Ground rent disappearing is part of what you are buying, which is why the landlord's loss of that rent forms part of the price. Our guide to ground rent in blocks explains what a peppercorn rent means in practice.

The four things you actually pay

1. The premium. This is the negotiated or tribunal-determined price for the new lease, and it is the only component nobody can quote you in advance. Schedule 13 paragraph 2 builds it from three parts:

"the diminution in value of the landlord's interest in the tenant's flat as determined in accordance with paragraph 3"

"the landlord's share of the marriage value as determined in accordance with paragraph 4"

"any amount of compensation payable to the landlord under paragraph 5"

In plain terms: what the landlord loses (the ground rent stream and the reversion — the value of getting the flat back at the end of the term), plus a share of the value the extension creates, plus compensation for any other loss.

2. Your solicitor. Conveyancing and notice work on the statutory route.

3. Your valuer. You need a surveyor experienced in leasehold valuation to produce the figure your notice is based on. Serving a notice with an unrealistic premium is the most common way claims go wrong.

4. The landlord's reasonable costs. Under section 60, the tenant giving the notice

"shall be liable, to the extent that they have been incurred by any relevant person in pursuance of the notice, for the reasonable costs"

— covering the landlord's investigation, valuation and grant of the new lease. "Reasonable" is the operative word; it is not a blank cheque, and it is capable of being challenged.

The premium is valuation-dependent and varies enormously with lease length, flat value, ground rent and location. Anyone quoting you a single national figure is guessing. Get a valuation.

Why 80 years is the number that matters

Marriage value is the increase in the flat's value created by extending the lease. Schedule 13 paragraph 4(2A) is explicit:

"Where at the relevant date the unexpired term of the tenant's existing lease exceeds eighty years, the marriage value shall be taken to be nil."

Above 80 years, that whole component drops out. Below 80 years, the landlord is entitled to a share of it, and the premium steps up noticeably — then keeps climbing as the term shortens.

The practical consequence for anyone with a lease in the low 80s: the cost of waiting is not gradual. It is a cliff you cross on a specific date. If your lease is at 82 years and you are thinking about extending "in a few years," you are thinking about it too late.

Directors can do leaseholders a genuine service here simply by knowing the remaining terms in the block. Leases in a block are often granted on the same day, which means a whole building can approach the 80-year mark together.

What the 2024 Act changed — and what it did not

This is where most of what you will read online is out of date or simply wrong, so be careful.

In force. Section 27 of the Leasehold and Freehold Reform Act 2024 — "Removal of qualifying period before enfranchisement and extension claims" — removed the two-year ownership requirement. It came into force on 31 January 2025. You no longer have to have owned the flat for two years before serving a notice; you can start on the day you complete.

Not in force. The 2024 Act's headline changes to the price — abolishing marriage value and extending the statutory term to 990 years — are in the Act but require secondary legislation and have not been commenced. Until they are:

• Marriage value still applies below 80 years.
• The statutory extension is still 90 years, not 990.
• Section 60 still makes you liable for the landlord's reasonable costs (the 2024 Act would omit section 60, but that change is not in force either).

If you read that marriage value has been abolished, check the commencement position before acting on it. A leaseholder who delays a claim waiting for a reform that has not commenced can cross the 80-year threshold while waiting — and pay considerably more as a result.

What directors should actually do

Lease extension is a leaseholder's private transaction, not block business. But it touches your block in three ways worth being ready for:

1. Know the lease terms in your block. If a cluster of flats is approaching 80 years, say so at the AGM. Nobody thanks you for the warning they did not get.
2. Expect notices. Where your company holds the freehold, it is the landlord for these purposes, and a section 42 notice lands on you. That is a matter for the company's solicitor, not something to answer informally. Our guide to the freehold residents management company structure covers where that responsibility sits.
3. Do not advise. Point leaseholders at a leasehold valuer and a solicitor. Getting the premium wrong is expensive and the mistake tends to attach to whoever gave the number.

Short leases also affect the block collectively: flats under 80 years are harder to mortgage, which slows sales, which makes service charge collection harder. It is worth caring about even when it is not your flat.

LevyBoard is building guided block management software for volunteer directors — service charge accounting, arrears tracking, and Section 20 compliance, designed for people who did not sign up to become property managers.

This guide applies to England and Wales. Scottish and Northern Irish property law differs significantly. This is general information, not legal advice — lease extension premiums are valuation-dependent and the reform position is moving, so check the current commencement status before relying on any figure here. For a specific lease, instruct a solicitor and a leasehold valuer, or start with the free service at the Leasehold Advisory Service (LEASE).

Sources

• Leasehold Reform, Housing and Urban Development Act 1993, section 39 — right to acquire a new lease
• LRHUDA 1993, section 56 — obligation to grant a new lease (90 years, peppercorn rent)
• LRHUDA 1993, Schedule 13 — premium payable, including the 80-year marriage value rule
• LRHUDA 1993, section 60 — costs incurred in pursuance of the notice
• Leasehold and Freehold Reform Act 2024, section 27 — removal of the qualifying period (in force 31 January 2025)
• Leasehold Advisory Service (LEASE)