Lease Extension Cost Calculator UK

A lease extension adds years to your remaining lease term, typically to 990 years with a peppercorn (zero) ground rent. Short leases reduce property value, make mortgages harder to obtain, and become increasingly expensive to extend. Most mortgage lenders require at least 70-80 years remaining on the lease.

Marriage value is the increase in property value created by granting the lease extension. Under the Leasehold Reform, Housing and Urban Development Act 1993, if the lease has less than 80 years remaining, the leaseholder must pay 50% of the marriage value to the freeholder. This makes extending a lease with under 80 years significantly more expensive.

The premium consists of three parts: (1) the diminution in the freeholder's interest (the loss of ground rent income and reversion value), (2) 50% of the marriage value if the lease is under 80 years, and (3) any compensation for other losses. The calculation uses capitalisation rates (typically 5-6%) and the Sportelli deferment rate of 4.75% for flats.

For a flat worth £300,000 with 75 years remaining and £250/year ground rent, the premium would be approximately £15,000-£25,000. With 60 years remaining, this could rise to £30,000-£50,000 due to marriage value. With 90 years remaining and no marriage value, it might be only £5,000-£10,000.

Yes, absolutely. Once your lease drops below 80 years, the marriage value component kicks in and the premium increases sharply. For example, extending at 81 years might cost £8,000, but waiting until 79 years could cost £15,000+. The difference grows exponentially as the lease gets shorter. Extending early saves thousands.

A Section 42 notice is the formal legal notice served on the freeholder to start the statutory lease extension process under the 1993 Act. You must have owned the flat for at least 2 years before serving it. The notice states the premium you propose to pay. The freeholder then has 2 months to respond with a counter-notice.

Yes, under the Leasehold Reform Act 1967, leaseholders of houses have the right to either extend the lease by 50 years or purchase the freehold. The qualification criteria are different from flats. House lease extensions do not include marriage value in the same way, and the calculation methodology differs.

You will need to pay for: your own solicitor (£1,500-£3,000), your own valuation surveyor (£500-£1,500), the freeholder's reasonable legal costs (£1,000-£2,000), and the freeholder's valuation costs (£500-£1,000). Total professional fees typically range from £3,500 to £7,500 on top of the premium.

The statutory process takes a minimum of 6-8 months. After serving the Section 42 notice, the freeholder has 2 months to respond. If terms are agreed, completion follows in 2-3 months. If disputed, a Tribunal hearing may add another 6-12 months. An informal (non-statutory) extension can be quicker but offers fewer protections.

The Leasehold and Freehold Reform Act 2024 aims to make lease extensions cheaper by removing marriage value and setting standard capitalisation and deferment rates. However, the detailed regulations are still being developed. Until the new rules are in force, the existing calculation methodology applies. This calculator uses the current (pre-reform) rules.