Simple guide:
How To Extend A Lease

Everything you need to know

2023 update

Page highlights
  • If extending your lease the smart thing to do
  • How how to do it & how much it will cost
  • Who you need on your team


The basics

What is a lease?

  • A lease is a legally binding contract between a Lessor (Landlord) and a Lessee (Tenant) which creates an interest in property.
  • Unlike a freehold property, the interest created by a lease is for a defined term of years, usually in return for the payment of rent or a capital sum at the outset by way of premium (price).
  • The lease will state your rights and responsibilities as the leaseholder, and the rights and responsibilities of your landlord.
  • The lease gives you the right to occupy and use your property for a set period of time (the ‘term’).
  • When your lease term is up, ownership of the entire property goes back to the Landlord. (know as the reversion’).

What is a lease extension?

A lease extension is the process of adding years back onto the lease and extending the time you have before the property goes back into the ownership of the Landlord.

You can do this by negotiating directly with the landlord or by serving a Section 42 Notice (which we recommend you have an experienced solicitor do on your behalf).

You can find out how long your lease has left to run by downloading the leasehold title from the Land Registry website for just £3.

Why extend a lease?

  1. Extending a lease with less than 80 years remains can significantly increase the value of your property.
  2. If your lease is short, few mortgage lenders will be prepared to lend against it and so it will be hard to sell the property – your potential pool of buyers will be limited to just cash buyers.
  3. Property with a short lease will be hard to remortgage (should you need to).
  4. As the lease length goes down, the cost of extending the lease goes up.
  5. Below 80 years, it attracts marriage value – which means if you extend, the freeholder is entitled to 50% of value which the extension adds to the property.

Who can extend a lease?

Anyone deemed to be a ‘qualified leaseholder’ can apply for a lease extension.

You are deemed ‘qualified’ if:

a) You’ve owned the property for at least 2 years


b) The original lease granted was for a term in excess of 21 years

Subject to meeting the above criteria you can force the landlord to extend the lease on attractive terms.

Rights granted under the Leasehold Reform Housing and Urban Development Act 1993

Under the above act ‘qualified leaseholders’ are entitled to an extra 90 years on top of what remains on the lease and with the whole of the term being at a peppercorn (nil) rent.

So, if 75 years are left to go, a new lease of 165 years (90 plus 75) can be granted in substitution for the existing lease, with no rent to pay throughout the whole term.

In return, the Landlord is entitled to a ‘premium‘ (lump sum of cash) for the lease extension.

The size of the premium is subject to negotiation but based on a formula set out in the Leasehold Reform Housing & Urban Development Act 1993.

What other rights do you have?

As a leaseholder, you have the right:

  • To know the freeholder’s name and address.
  • To be given information about insurance costs.
  • To see how service charges are calculated and how the money is spent, with receipts if requested.
  • To be consulted via a Section 20 consultation about charges if you have to pay more than £250 for planned work, or £100 per year for work lasting more than 12 months. You may dispute any charges you feel are unreasonable, of if the work is not carried out to an acceptable standard by applying to a tribunal.
  • To join with other tenants and collectively acquire the freehold of their block, whether or not the landlord wishes to sell.


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Should I extend my lease?

Yes!..If your lease is below 90 years and getting close to 80 years.

Once your lease drops below 80 years, it becomes significantly more expensive to extend due to ‘marriage value’

Marriage value

This is basically the increase in the value of the property thanks to the lease extension.

The Landlord is entitled to 50% of it when a lease with less than 80 years left is extended.

e.g. If the property is worth £125,000 with a 60 year lease and then valued at £160,000 with a 150 year lease, the marriage value is £35,000 (£160k-£125k) and the Landlord is entitled to a payment of £17.5k (50% of £35k).

Should I extend my lease before selling?

Whether to extend your lease before selling depends largely on how long you have left on the lease and how soon you need to sell.

Time left on the lease (rules of thumb):

  • +90 years = Not worth extending
  • 90-85 years = Worth extending (improves saleability)
  • 85-80 years = Worth extending or at least get the process started*

*This is important because the new owner will not be able to request an extension for two years, by which time the lease could be shorter than 80 years, at which point it suddenly becomes much more expensive to extend and this could affect the value you sell the property for.


  • Below 80 years, and the number of lenders willing to offer mortgages against the property starts to drop away.
  • Only a handful of lenders will lend and the terms would be less favourable (i.e. lower loan to value and a higher rate).
  • Below 60 years, it may well be impossible to get a mortgage of any type at all.

Saleability is effected

  • Your property will be harder to sell if buyers can’t secure a mortgage against it.
  • Your pool of buyers will be limited to cash house buyers only who are fewer in number and tend to be most interested in bargains.

Should I extend my lease or buy share of freehold?

Under the 1993 Leasehold Reform Act, qualifying leaseholders have the right to extend their lease or join forces with other leaseholders to purchase the freehold – knows as ‘collective enfranchisement’.

If you are not happy with the freeholder, either because of the way they manage the property or due to high charges (ground rent, insurance, service charges etc..), becoming your own freehold will certainly give you control over these things.

This option requires co-operation between you and your neighbours and you need to meet the eligibility criteria:

  • At least half of all flat owners must be leaseholders and want to buy the freehold.
  • In the case of a block of just two flats, both of you must want to purchase the freehold.
  • At least two thirds of leaseholders must hold long leases (i.e. originally granted for in excess of 21 years).

It is not a decision to take lightly as you will need somebody to run the freehold company (usually a Limited entity) and serve as directors.

If you are considering this route, you will need to consult an experienced leasehold solicitor and RICS Leasehold Reform valuation surveyor.

More: Collective enfranchisement factsheet (LEASE)

When is it not worth extending your lease?

If you have more than 90 years left on the lease, it may not be worth extending yet unless there are big savings to be made on ground rent or you plan to stay there for several years.

However, if you have no plans to move at all and are elderly, you may wish to leave the problem of a diminishing lease to those who inherit your estate. However, it is important to make sure you (and your family) understand the implications.

If there are plans for collective enfranchisement (when leaseholders act together buy the freehold), then it may not be worth extending your lease on your own as waiting until afterwards should make it cheaper and easier.

In addition, your application could be suspended if leaseholders apply to purchase the freehold while your own extension is being considered.

How long does it take to extend a lease?

  • Expect 4 – 12 months

Applying for a lease extension can take several months, as it requires:

  1. Getting valuation advice.
  2. Serving a Section 42 Notice.
  3. Receiving a counter notice (Section 45) from the freeholder.

In the Section 42 Notice, you must give the freeholder at least two months to respond.

A further two months are allowed for negotiations and, if an agreement cannot be reached, the matter can be referred to the Leasehold Valuation Tribunal.

In this case, the process could take over a year.

Pro Tip

  • Make sure you allow plenty of time, particularly if you are nearing the 80-year cut-off point at which marriage value becomes payable, or if you plan to sell the property.

How much does it cost to extend a lease?

The total cost of your lease extension will be made up of two parts:

  1. The premium (£5k and upwards)
  2. Professional fees, costs & taxes (£2k-£3k but can be much more)

The premium

There is no way to put finite fixed price on the premium as the final figure will be the result of negotiation between you and your Landlord.

It will also have to take into account any marriage value and that will depend comparable property values.

That said, you can get a rough estimate from the online calculator provided by LEASE:

Pro Tip

  • Although online calculators are quick and easy, they are not necessarily accurate and so you absolutely must seek out a leasehold valuation professional.
  • A competent valuation surveyor should provide a ‘best and worst‘ case figure, valuing from both the leaseholder’s and the landlord’s perspective and, from local experience, anticipating areas of claim and counter-claim.
  • This is the only way to get a reliable estimate and properly prepare for negotiations.
  • Your surveyor will be the best person to negotiate on the ‘premium’ payable to the Freeholder via their Solicitors and so take your time to find a good one.

Help: Find an experienced surveyor to value and negotiate your lease extension

What is the lease extension formula?

The lease extension formula is set out by the Leasehold Reform Act 1993 and provides the basis for calculating the amount of capital (the ‘premium’) a leaseholder must pay to the freeholder if extending a lease.

It considers what the landlord might lose from a value perspective now and in the future, including compensation for losses from granting the new lease and the landlord’s share of the marriage value.

What is marriage value?

  • When you extend a lease, the property’s value usually rises if the lease is shorter than 80 years.
  • For example a property my be worth £120,000 with a short 45 year lease may be worth £175,000 with a lease extended past 90 years.
  • This increase in value (£55k in the example above) is known as ‘marriage value’ and the freeholder is entitled to 50% of it.
  • This is why many people will advise you to extend a lease before it diminishes to 80 years.

Professional fees, costs & taxes

Even for the most straightforward lease extension, this part of the equation is likely to cost around £3,000 and be made up of:

  1. Your solicitor’s conveyancing fees.
  2. Your surveyor’s lease extension valuation survey costs.
  3. Your Landlord’s reasonable legal fees.
  4. Your Landlord’s reasonable lease extension valuation survey costs.

SDLT considerations

  • If this is your only property, you will have to pay SDLT at the standard rate if the premium is in excess of £125,000.
  • If you are extending a lease on a property which is not your only property or is not your main residence then it will attract the higher rates of stamp duty (3% surcharge) if the agreed premium is £40,000 or over.

Bottom line

The eventual cost of the new lease will be;

The premium + Both your own and the landlord’s ‘reasonable’ professional costs + Any SDLT liability

Step-by-step guide to the lease extension process

  1. Check you’re an eligible leaseholder. Your original lease must have been longer than 21 years and you must have owned the property for two years or more.
  2. Ensure you have the funds to complete the process, which can cost from several thousand pounds.
  3. Find out who owns the freehold and if no freeholder can be found apply for a vesting order.
  4. Appoint a valuation surveyor with expert knowledge of both leasehold and the local property market. They should be a member of RICS and ideally ALEP.
  5. Appoint a solicitor with experience in extending a lease and who is a member of ALEP.
  6. Consider whether to approach your freeholder personally to discuss extending your lease or get your surveyor or solicitor to do this for you.
  7. If your freeholder is willing to negotiate and you reach an agreement easily, make an informal offer.
  8. If your freeholder accepted your informal offer, you may now make a formal offer. (If they did not accept your informal offer, your solicitor will need to serve a Section 42 Notice).
  9. The freeholder may now require you to pay a deposit within 14 days. This will be 10% of the cost of the lease or £250, whichever is higher.
  10. The freeholder will serve a counter notice (Section 45), either accepting your offer, proposing alternative terms or rejecting your request.
  11. If no agreement is reached, you can seek help from the Leasehold Advisory Service.
  12. You can apply to the First Tier Tribunal or Leasehold Valuation Tribunal. Unfortunately, this could turn out to be a lengthy and expensive process, see for more information on tribunals
  13. If you have a mortgage on the property, your lender will need to approve the lease extension.
  14. Your solicitor will finalise the lease extension.

More: Lease Extension Guide – Getting Started (LEASE)

Things to watch out for

Buying a flat with a short lease

As a buyer, you are not able to extend a lease, and will not be able to do so until you have owned the property for two years.

Most mortgage lenders will refuse to give you a loan for a property with a short lease, although the definition of ‘short’ varies from lender to lender.

If you are able to purchase a property with a short lease, you can:

  1. Ask the seller to extend the lease before you buy, which will delay the transaction by several months.
  2. Ask the seller to start proceedings, assigning the benefit to you on completion.
  3. Buy the property and wait the required two years before serving a notice, bearing in mind that 50% of the marriage value will be payable to the freeholder once the lease drops below 80 years.

Extending a lease on a maisonette

  • The rules for extending a lease on a maisonette are the same as for a flat or apartment.

Extending a lease on a shared ownership property

  • If you have a shared ownership property, it is important to check with your landlord to find out their lease extension policy.
  • You may find it makes more sense financially to purchase a further share in the property instead, so seek independent advice.
  • If you initially purchased the property on a shared ownership basis and have since increased your share so that you now own 100% of the property, you have the right to extend the lease under the rights detailed in the 1993 Leasehold Reform Act.

Common lease extension questions

What is the minimum lease needed to get a mortgage?

Mortgage lenders have different lending criteria and vary on their definition of a ‘short’ lease; some insist on a lease of 85+ years, while others stipulate it must be a minimum length at the end of the mortgage term.

Can you build an extension on a leasehold property?

Check your lease to see if you are entitled to extend your property, then ensure you seek permission from the freeholder, who is likely to want to see your plans to ensure that any changes represent an improvement.

There may be a fee for their consent and for any subsequent changes to the lease.

If they wish to get their own surveyor to inspect your plans, you’ll probably have to pay for this too.

Can I extend a lease on a shared ownership property?

With a shared ownership property, you do not have the same rights to extend your lease under the 1993 Leasehold Reform Act, but you may check with the freeholder as they may have their own policy.

If you increase your share in the property until it is wholly yours, you then are entitled to extend your lease, as long as you meet the criteria stipulated in the Act, i.e. you’ve owned the property (the whole share) for two years.

How much does it cost to extend a lease on a flat

There are four strands to the costs of extending a lease:

  1. Your legal costs and fees, which could range from £2,400 to £4,500
  2. The freeholder’s ‘reasonable’ legal and valuation fees, from £1,200 to £2,100
  3. The premium, i.e. the cost of the additional lease term, which could be anything from £3,000
  4. If you own or pat-own more than one property you will also be liable for the 3% SDLT surcharge if the premium is in excess of £40,000.

Costs will depend on the value of the property, the length of the lease and whether lengthy negotiations are required.

If the case is referred to a tribunal, expect to pay at least another £1,600 on top.

Bear in mind if you withdraw your application after serving a Section 42 Notice, you will still be liable for costs and fees.

The premium is calculated based on the value of the property now, how much it would increase by with the benefit of a longer lease and the length of the remaining lease.

As a general rule, the shorter the remaining lease, the higher the premium will be.

What is a section 42 notice?

A Section 42 Notice, also known as a Tenants’ Notice, is served by a solicitor to your freeholder as a formal request to extend the lease.

It stipulates the premium you are willing to pay and gives the freeholder at least two months to respond.

It must be served accurately or your freeholder can reject it and you must wait another 12 months before you can try again.

What is ground rent?

If you own a leasehold home, most often a flat or apartment, the freeholder (or landlord) owns the land on which your property sits and may charge you ground rent for the use of this land.

Ground rent is different to service charges, which cover maintenance and repairs to the building and communal areas.

How much is ground rent?

Ground rent is often quite low and could be as little as £50 a year, or it could be £200 or more. Your landlord cannot increase it unless you agree or it is stipulated in the lease.

If you have not paid your ground rent, your landlord/freeholder can demand it for the past six years, as a lump sum.

If you increase your lease using your rights details in the Leasehold Reform Act 1993, you should no longer have to pay ground rent.

Do you have to pay ground rent on a freehold property?

If you own a freehold property you should not usually have to pay ground rent.

If you live in a very old property, there is a small possibility that you may have to pay a historic rent called a ‘rentcharge’ to a third party, although these are now dying out.

What is leasehold enfranchisement?

Under the 1993 Leasehold Reform, Housing and Urban Development Act, leaseholders have the right to act together purchase the freehold, regardless of whether the landlord wishes to sell.

This is called ’collective enfranchisement‘, or ‘leasehold enfranchisement’.

To purchase the freehold, you must meet certain criteria:

  • At least half of the leaseholders in a block must be willing to purchase the freehold
  • In the case of a block of just two flats, both of you must want to purchase the freehold
  • At least two thirds of the leaseholders must be ‘qualifying tenants’, with leases originally longer than 21 years
  • You don’t have to live in the building and can be a landlord but you must not own more than two flats in the block
  • No more than 25% of the building can be used for non-residential purposes (commercial, retail). This does not include communal areas, and garages/parking spaces are classed as residential.

If you successfully purchase the freehold, somebody will need to be appointed to run the freehold company, and act as directors.

What is the difference between freehold and leasehold property?

If you buy a freehold property, you own both the building and the land on which it stands.

The vast majority of houses are freehold, although it is worth checking before purchase, especially if it is a new build.

With a leasehold property, such as a flat or apartment, you own the parts of the building you occupy, but not the land on which it sits or the communal areas.

These are owned by the freeholder, who leases it to you long-term. In return for the freeholder maintaining the communal areas of the building, the exterior, roof and any garden, you pay them a ground rent, service charge and maintenance fees.

Who owns the lease on my house?

You have the right to know the name and address of the freeholder of your house or flat.

If you are in any doubt, you can check this information by inputting your address into the Land Registry website by downloading the leasehold title for £3.

However this information should have been provided to you when you bought the property, so you can also check with your legal company.

What happens at the end of a lease?

If your lease runs out, technically you no longer have the right to live in the property as this reverts to the freeholder.

In reality, unless the landlord serves you with notice to leave, you may continue to live there on the same terms. You cannot be made to leave except by a court order for possession.

The landlord may choose to replace your tenancy with an assured periodic tenancy. In this case, you and the landlord can negotiate new terms or, if an agreement cannot be reached a Rent Assessment Committee can fix them.

What is considered a long lease?

Most people consider a long lease to be longer than 90 years, because as soon as it diminishes towards 80 years, the property decreases in value.

However, for the purposes of extending your lease under the rights bestowed in the 1993 Leasehold Reform Act, a ‘long’ lease is defined as 21 years.

You may only extend your lease if your original lease was over 21 years (original length, not time remaining) and you have owned the property for at least two years.

Conclusions & summary

  • As a leaseholder you need to know how many years remain on your lease because once it drops below 80 years, it becomes considerably more expensive to extend.
  • When purchasing leasehold property, you may feel more secure looking at those with leases of at least 83 years, as you do not have the right to extend the leasehold until you have owned it for two years, and the process of extending the lease can be quite lengthy.
  • Make sure you are aware of your rights as a leaseholder, which include the right to extend your lease by 90 years for a reasonable market fee, and the right to purchase part of the freehold under certain conditions.

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Gavin Brazg

Gavin Brazg

MSc Dip Arch

Founder & CEO

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