Leasehold

Lease Extension Calculator

Estimate the cost of extending your leasehold flat. Calculate the premium payable, professional fees, and return on investment for lease extensions.

AI-Powered

Free to use

Property Value

Current market value of your flat

£Current flat value

Estimated market value with current lease

Tip: Use recent comparable sales or get a valuation. Short lease properties sell below their extended-lease value.

Related Calculators

Marriage Value Calculator

Calculate marriage value for leases under 80 years

About the Lease Extension Calculator

What it does and how it helps you

The Lease Extension Calculator estimates the cost of extending your leasehold flat in England and Wales. Calculate the premium payable to your freeholder, professional fees, and the value increase you'll gain. Understand marriage value implications if your lease is below 80 years.

Estimate total premium payable to freeholder

Calculate marriage value (for leases under 80 years)

Model diminution in value using relativity graphs

Include professional fee estimates

Show return on investment from extending

Urgency indicator based on current lease length

How It Works

Understanding the calculation method

Lease extension in England and Wales follows the Leasehold Reform Housing and Urban Development Act 1993, which gives qualifying leaseholders a statutory right to extend their lease by 90 years at a peppercorn (zero) ground rent. Understanding the calculation helps you budget accurately and negotiate effectively.

The Premium Formula

The premium payable to extend a lease consists of three main components:

1. Diminution in Value: The reduction in the freeholder's interest caused by granting the new lease. This represents the present value of lost ground rent income and delayed reversion.

2. Marriage Value (if lease < 80 years): The enhanced value created by 'marrying' the leaseholder's interest with the extra 90 years. The freeholder is entitled to 50% of this gain. Below 80 years, this becomes the largest cost component.

3. Capitalised Ground Rent: The present value of the remaining ground rent payments during the existing lease term, capitalised at 6-7%.

The 80-Year Cliff Edge

The most critical threshold is 80 years. Once your lease falls below this point, marriage value kicks in—typically adding 50-100% to the extension cost. For example:

- 82 years: Marriage value = £0 - 78 years: Marriage value could be £15,000-25,000 on a £350,000 flat

Each year below 80 adds significant cost. If your lease is approaching 80 years, extending immediately could save tens of thousands of pounds.

Relativity

'Relativity' expresses the current lease value as a percentage of the freehold (or very long lease) value. A lease with 80 years remaining might have 88% relativity, meaning it's worth 88% of the freehold value. Shorter leases have lower relativity—a 60-year lease might be just 60% of freehold value.

Professional Fees

In addition to the premium, budget for:

- Surveyor: £800-2,500 for lease extension valuation - Solicitor: £1,500-3,000 for legal work - Freeholder's costs: You're legally required to pay the freeholder's reasonable surveyor and legal costs (typically £1,500-3,000) - Tribunal fees: Only if negotiations fail (hopefully avoided)

The Process

1. Qualify (2+ years ownership for statutory route) 2. Obtain professional valuation 3. Serve Section 42 Notice on freeholder 4. Freeholder responds with counter-notice 5. Negotiate premium 6. Complete the extension (or go to Tribunal if no agreement)

The process typically takes 4-12 months. You can also negotiate informally without the statutory route, though this offers less protection.

When to use this calculator

Use this calculator when considering extending your leasehold flat, buying a property with a short lease, or deciding whether to extend now versus later. It's particularly important if your lease is approaching 80 years—each year below this threshold significantly increases costs. Also useful for solicitors and property investors evaluating leasehold transactions.

Frequently Asked Questions

Common questions about this calculator

Marriage value is the additional value created when a short lease is extended. If your lease is under 80 years, the freeholder is entitled to 50% of this 'marriage value' as part of the premium. For example, if extending increases your property value by £30,000, you'd pay £15,000 marriage value plus other premium components. This is why extending before reaching 80 years is so important—above 80 years, no marriage value is payable.

Costs vary enormously based on flat value, lease length, and ground rent. For a £350,000 London flat with 82 years remaining, expect £8,000-15,000 premium plus £3,000-6,000 fees. The same flat with 72 years might cost £25,000-40,000 in premium alone due to marriage value. Properties in Prime Central London or with high ground rents can cost significantly more. Always get a professional valuation.

The Leasehold Reform Act 1993 requires marriage value to be paid when the lease has less than 80 years remaining. This creates a 'cliff edge' where costs jump dramatically. A lease with 81 years might cost £10,000 to extend, while 79 years could cost £20,000+ for the same property. Every year below 80 adds to the cost. If your lease is approaching 80 years, extending immediately is usually the financially smart decision.

Yes, you can negotiate informally with your freeholder. Some freeholders prefer this as it's quicker and cheaper. However, informal extensions offer less protection—the freeholder can refuse, set their own terms, or grant less than 90 years. The statutory process guarantees 90 years at peppercorn rent. If informal negotiations fail, you can always fall back to the statutory route (if you qualify with 2+ years ownership).

The statutory process typically takes 4-12 months. After serving your Section 42 Notice, the freeholder has 2 months to respond. Then follows negotiation (or Tribunal if needed), which can take 2-6 months. Completion adds another 1-2 months. Informal extensions can be quicker (2-4 months) if the freeholder is cooperative. Complex cases or Tribunal hearings can extend timescales significantly.

Related Property Terms

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