Expert legal advice for leaseholders extending their lease — statutory extensions under the 1993 Act, informal extensions, premium negotiation, tribunal hearings and the Leasehold and Freehold Reform Act 2024.
A short lease is one of the most pressing problems facing residential leaseholders in England and Wales. As a lease falls below 80 years remaining, the property becomes increasingly difficult to mortgage and sell, and the cost of extending rises significantly. With fewer than 80 years remaining, "marriage value" becomes payable — dramatically increasing the premium. Acting before the lease falls below this threshold can save leaseholders tens of thousands of pounds.
Legal Merchant's specialist solicitors advise leaseholders and freeholders on both statutory lease extensions (under the Leasehold Reform, Housing and Urban Development Act 1993) and informal (voluntary) extensions, and on the significant changes introduced by the Leasehold and Freehold Reform Act 2024.
Extend Now — Every Year Costs More. The premium for a statutory lease extension increases as the unexpired term shortens, and rises sharply once the lease falls below 80 years. Our solicitors can obtain a surveyor's valuation and advise on the cost of extending now versus waiting — in most cases, acting promptly saves significant money.
Statutory vs Informal Lease Extension
Statutory Extension (1993 Act)
The right to extend a flat lease by 90 years on a peppercorn ground rent, at a premium determined by statute. The freeholder cannot refuse. The process is formal and governed by the 1993 Act — from service of the section 42 tenant's notice to completion of the new lease.
Informal (Voluntary) Extension
A directly negotiated extension without using the statutory process. The freeholder and leaseholder agree terms freely — including the length of extension, the ground rent (if any), and any other changes to the lease. Faster and cheaper if the freeholder cooperates, but the leaseholder gives up some statutory protections.
House Lease Extensions (1967 Act)
Leaseholders of houses (rather than flats) have separate statutory rights under the Leasehold Reform Act 1967 — including the right to extend by 50 years or to purchase the freehold. The qualification criteria and valuation formula differ from flat leaseholders' rights.
Leasehold & Freehold Reform Act 2024
Major reforms are being phased in — including extending the statutory term from 90 to 990 years, abolishing marriage value for leases over 80 years, reforming the valuation methodology, and abolishing the two-year ownership requirement. Our solicitors advise on the current position and transition provisions.
The Statutory Lease Extension Process
Qualifying Conditions
To exercise the statutory right to extend a flat lease under the 1993 Act (as amended), the leaseholder must:
Hold a long lease (originally granted for more than 21 years)
Be a qualifying tenant of a flat
Under the Leasehold and Freehold Reform Act 2024, the previous requirement to have owned the lease for at least two years has been abolished — leaseholders can exercise the right as soon as they acquire the lease
Certain properties are excluded (e.g., leases of National Trust properties, certain cathedral and Crown properties) — our solicitors check eligibility before advising on the process.
Step-by-Step: Statutory Lease Extension
Instruct a specialist surveyor — to value the premium payable under the statutory formula
Instruct solicitors — we advise on the process and check the title and existing lease
Serve tenant's notice (section 42) — we draft and serve the section 42 notice on the freeholder, specifying the premium proposed and the terms of the new lease
Landlord's counter-notice (section 45) — the freeholder has two months to respond, admitting or denying the right and proposing different terms/premium
Negotiation — the parties negotiate the premium and any other terms through their solicitors and surveyors
First-tier Tribunal — if no agreement is reached within six months of the counter-notice, either party can apply to the First-tier Tribunal for determination of the premium and terms
Completion — the new lease is completed and registered at HM Land Registry
Premium Calculation — Key Factors
The statutory premium for a lease extension is calculated using a formula based on:
Component
Description
Capitalised Ground Rent
The present value of the freeholder's right to receive ground rent for the remaining lease term
Reversion Value
The present value of the freeholder's right to recover the property at the end of the existing (un-extended) lease term
Marriage Value
The additional value created by merging the extended lease with the freehold — only payable where the existing lease has fewer than 80 years remaining. Proposed to be abolished under the 2024 Act reforms for leases over 80 years.
Additional Compensation
Any other loss suffered by the freeholder as a result of the extension (e.g., reduction in value of other parts of their property)
The 2024 Act introduces new prescribed rates for the deferment rate and capitalisation rate used in the calculation — which generally reduce premiums for leaseholders. Our surveyors use the latest rates to calculate accurate premium estimates.
The Importance of the 80-Year Threshold
The most critical factor in lease extension premium calculations is whether the lease has more or fewer than 80 years remaining:
Over 80 years remaining: No marriage value is payable. The premium is typically lower and more straightforward to calculate.
Under 80 years remaining: Marriage value becomes payable, adding significantly to the premium. The shorter the lease, the higher the marriage value component.
Under 70 years remaining: Most mortgage lenders will refuse to lend on the property. Extending becomes urgent to protect saleability and mortgageability.
Under 60 years remaining: The property is very difficult to sell and the extension premium can be extremely expensive.
Our advice: do not wait. If your lease is approaching 80 years, extend now — before marriage value kicks in or increases further.
Informal Lease Extensions
Where the freeholder is cooperative, an informal extension can be faster and cheaper than the statutory process. Key differences:
No statutory notice requirements — the parties agree terms directly
The freeholder can propose different terms — including a new ground rent (if the leaseholder agrees)
The leaseholder does not need to pay the freeholder's legal costs (unlike under the statutory process)
However: the leaseholder loses statutory protections — for example, if the freeholder withdraws, the leaseholder has no right to force the sale
Ground rent: under the Leasehold Reform (Ground Rent) Act 2022, new leases cannot be granted with a ground rent above a peppercorn. This applies to informal extensions — freeholders cannot insist on a new rent-paying ground rent in an informal extension
Frequently Asked Questions
An uncontested statutory lease extension typically takes 3–6 months from service of the section 42 notice to completion and registration. Where the premium is disputed and the matter proceeds to the First-tier Tribunal, it can take 12–18 months or longer. An informal extension, where the freeholder cooperates, can sometimes be completed in 6–8 weeks. Our solicitors work proactively to keep the process on track and advise on realistic timescales at the outset.
Under the statutory lease extension process, yes — the leaseholder is obliged to pay the freeholder's reasonable legal and valuation costs in connection with the extension. The Act specifies that these costs must be "reasonable" — you are not obliged to pay excessive or unnecessary costs. If the freeholder's costs seem unreasonable, these can be challenged. In an informal extension, the parties can negotiate whether costs are shared or paid by one party.
Yes — and crucially, you can assign the benefit of a section 42 tenant's notice to a buyer when you sell. This means you can commence the statutory lease extension process and then sell the flat "with the benefit of the notice" — the buyer takes over and completes the extension in their own name, paying the agreed premium. This is particularly useful where you need to sell quickly but want to enable the buyer to extend the lease. Our solicitors handle both sides of these transactions and advise on the mechanics of notice assignment on sale.
The Leasehold and Freehold Reform Act 2024 introduces major changes to lease extension law, being phased in over time. Key changes include: (1) Abolition of the two-year ownership requirement — leaseholders can extend immediately after purchase; (2) Increase in the statutory extension term from 90 years to 990 years for flats (and 990 years for houses); (3) Abolition of marriage value for leases with over 80 years unexpired — significantly reducing premiums in many cases; (4) Reformed valuation methodology with new prescribed capitalisation and deferment rates; (5) Simplification of the process with new prescribed notices and forms. Not all provisions are yet in force — our solicitors advise on the current position and what is coming.