Why Extending Your Lease Matters
If you own a leasehold flat, the length of your lease is one of the most important factors determining your property's value, marketability, and mortgage eligibility. A lease that is too short can make your flat effectively unsaleable, unremortgageable, and rapidly diminishing in value.
The good news is that leaseholders in England and Wales have strong statutory rights to extend their lease — and the Leasehold and Freehold Reform Act 2024 has made extending cheaper and easier than ever before.
Do You Qualify for a Statutory Lease Extension?
To exercise the statutory right to extend your lease under the Leasehold Reform, Housing and Urban Development Act 1993 (as reformed by the Leasehold and Freehold Reform Act 2024), you must:
- Own a long lease — a lease originally granted for more than 21 years
- Be the registered owner (you no longer need to have owned the property for two years — the qualifying period has been abolished)
- Not occupy the property under a business tenancy
The property must also qualify: generally, flats (rather than houses, which have different enfranchisement rights) qualify for the statutory lease extension procedure.
What Can You Get Under a Statutory Extension?
Under the 2024 reforms, a qualifying leaseholder is entitled to:
- An extension of the lease by 990 years from the date of extension (increased from 90 years previously)
- A ground rent of peppercorn (effectively zero) for the duration of the extended lease
- An extension on broadly the same terms as the existing lease (subject to updating for legislative changes)
A 990-year lease is, for all practical purposes, equivalent to freehold ownership in terms of lender acceptability and market value.
How Is the Lease Extension Premium Calculated?
The premium you pay to the freeholder for a statutory lease extension is calculated using a complex actuarial formula that takes into account:
- The current market value of the property
- The current ground rent
- The unexpired term of the lease
- The current deferment rate (the assumed investment return that a freeholder would achieve)
Under the 2024 reforms, marriage value has been abolished — meaning you no longer pay a share of the "uplift" in value created by the extension. This has significantly reduced premiums for properties with leases below 80 years.
It is essential to instruct a specialist leasehold valuer (RICS-qualified) before serving a Section 42 notice to ensure the premium offered is realistic and that you do not underprice your notice (which can prejudice your position).
Informal vs Statutory Extension: Which Is Better?
Statutory Extension
Advantages: You cannot be refused. The freeholder cannot increase the premium beyond what a tribunal would award. You get 990 years at peppercorn ground rent.
Disadvantages: Slower (typically 6–12 months). The freeholder's costs are partly your responsibility. Tribunal proceedings are possible if agreement cannot be reached.
Informal Extension
Advantages: Can be faster and more flexible. Sometimes cheaper in costs.
Disadvantages: The freeholder can refuse to negotiate. You are at the freeholder's mercy on terms — they can impose onerous conditions, higher ground rents, or a shorter extension. No statutory protections apply.
In most cases, the statutory route is preferable — particularly following the 2024 reforms which have made it more accessible and less expensive. Your solicitor will advise on which route is more appropriate for your specific situation.
The Statutory Lease Extension Process
Costs of a Lease Extension
- Leasehold premium: The main cost — payable to the freeholder. Varies widely based on the factors above.
- Your valuer's fees: Typically £1,000–£3,000 depending on complexity
- Your solicitor's fees: Typically £1,500–£3,000
- Freeholder's costs: You are responsible for the freeholder's reasonable legal and valuation costs — typically £1,000–£3,000
- Land Registry fees: Based on the value of the transaction
