Lease extension cost: how the premium is worked out (England and Wales)

Who can extend, and how

You can also ask the landlord for a voluntary (informal) extension. LEASE says it can be faster, but the landlord does not have to agree and the terms (length, ground rent) are whatever you negotiate. Under the Leasehold Reform (Ground Rent) Act 2022, the extended portion of a voluntary extension carries a peppercorn ground rent: see leasehold and freehold.

Houses follow a different law, the Leasehold Reform Act 1967. LEASE says a qualifying house owner can add 50 years, with no premium, but the ground rent becomes a “modern ground rent”, usually higher. Many house owners buy the freehold instead.

What the premium is made of

LEASE lists what the premium compensates the landlord for under the 1993 Act:

The valuation date is the date the Section 42 notice is served. LEASE stresses that the result is “an estimate within a range, not a fixed price”, that small changes in the deferment rate or local sales evidence can move the figure by thousands of pounds, and that both sides normally instruct specialist valuers. Today the deferment and capitalisation rates are argued between valuers or set by the tribunal; the 2024 Act lets the government prescribe them, and it has consulted on how (see below).

The 80-year threshold

Marriage value is why advice centres warn about leases near 80 years. GOV.UK says “when there are 80 years or less remaining on your lease, the cost of extending it increases significantly”. LEASE advises urgent specialist advice if your lease is just over 80 years.

Marriage value: LEASE’s illustration

The Leasehold Advisory Service gives this example. It is LEASE’s illustration, not a Payotte calculation and not a valuation of any real flat:

On top of that £17,050, the premium includes the landlord’s loss of ground rent and reversion. LEASE runs a free lease extension calculator for flats in England and Wales; it gives an estimate, not a binding figure.

The other costs

Payotte found no official schedule of professional fees: ask for written quotes. LEASE describes the landlord’s costs as possibly “hundreds of pounds”.

What the 2024 Act changes, and what is in force

The GOV.UK explainer (updated 7 September 2026) says the government intends to bring these changes in “as soon as possible”, which requires regulations and fixes through a forthcoming Commonhold and Leasehold Reform Bill. It adds that freeholders challenged some enfranchisement reforms; the government won in the High Court, but the decision is under appeal. LEASE says the government has stated the prescribed rates will not be set to deliberately lower prices, and that “until those rates are finalised, we will not know whether the cost of lease extensions will come down for all leaseholders”.

Extend now or wait?

LEASE does not give one answer. Its guidance, last updated 10 August 2026: with 80 years or less or a ground rent above 0.1% of the property value, waiting may be cheaper once the reforms apply; just over 80 years, there is a risk in waiting; if you need to sell or remortgage soon, some practitioners advise not to wait. The proposed £250 ground rent cap on existing leases is not law either: see service charges and ground rent.

Scotland and Northern Ireland

Scotland has no equivalent right: since the Land Tenure Reform (Scotland) Act 1974, property under a new long lease cannot be used as a private dwelling (s.8), and the Long Leases (Scotland) Act 2012 converted remaining “ultra-long” leases into ownership. In Northern Ireland, Payotte did not find a statutory flat lease extension equivalent on the official pages read; owners of houses held under a lease or fee farm grant can buy out the ground rent instead, as explained in leasehold and freehold.

Which professional to consult

A specialist valuer calculates the premium and negotiates with the landlord’s valuer. A conveyancer experienced in lease extensions serves the notices, checks the deadlines and registers the new lease. If you are buying a flat with a short lease, raise it before exchange: see conveyancing explained. LEASE treats extending while you are selling or buying as a “special situation” with its own procedure.