Lease Extension Calculator 2026: How Much Will It Cost to Extend Your Lease?

Extending a lease is one of the most important financial decisions a leaseholder can make. Use our free calculator below to estimate the premium you might pay under the current statutory valuation framework, and read on to understand exactly how the calculation works, what the law says, and how to get the best deal.

Lease Extension Premium Calculator

Why Extend Your Lease?

If you own a leasehold flat in England or Wales, the length of your remaining lease directly affects the value of your home, your ability to sell it, and your mortgage options. A lease is a wasting asset — it loses value with every passing year. Extending your lease restores that value and protects your investment for the long term.

Mortgage lenders typically require at least 70–80 years remaining on a lease before they will lend against the property. Some demand even more. Once your lease falls below the lender's minimum, potential buyers simply cannot get a mortgage, making the flat virtually unsellable on the open market. Extending your lease removes this barrier entirely and opens the door to the widest pool of buyers when you eventually choose to sell.

Beyond the financial reasons, a longer lease provides peace of mind. You avoid the annual erosion of your property's value, you sidestep the risk of escalating ground rent obligations, and — after a statutory extension — your ground rent drops to a peppercorn (effectively zero). For most leaseholders, extending is not a question of whether but when.

The Critical 80-Year Threshold

The single most important number in lease extension economics is 80 years. Under the Leasehold Reform, Housing and Urban Development Act 1993, when your lease drops below 80 years remaining, a new component called marriage value is added to the premium calculation. Marriage value represents the uplift in the property's value that arises from merging the leaseholder's short-lease interest with the freeholder's reversion — and the leaseholder must pay the freeholder 50% of that gain. Read our detailed guide on marriage value for leaseholds to understand the full calculation.

This creates a dramatic financial cliff edge. Consider a London flat worth £350,000 with 81 years on the lease: the statutory premium might sit around £10,000–£12,000. The identical flat at 79 years could cost £25,000 or more, purely because marriage value kicks in. Every further year below 80, the marriage value accelerates because the relativity — the ratio of the existing lease's value to the freehold value — drops faster and faster. If your lease is anywhere near the 80-year mark, acting before it crosses the threshold can save you tens of thousands of pounds.

How the Lease Extension Premium Is Calculated

Under the 1993 Act, the premium a leaseholder pays consists of up to three elements. Understanding each one demystifies the numbers and puts you in a stronger position when negotiating.

1. Diminution in the Landlord's Interest

This compensates the landlord for what they lose by granting the extension. It has two parts:

• Loss of ground rent income — the present value of the ground rent stream the landlord will no longer receive. This is calculated using a capitalisation rate (typically 6%) applied over the unexpired term. If ground rent escalates — through doubling clauses or RPI-linked reviews — the present value can be substantially higher than for a fixed rent.
• Loss of reversion — the present value of the landlord's right to receive the property back at the end of the lease. This is the freehold value discounted back over the unexpired term at the deferment rate. The landmark Sportelli decision (2007) set the deferment rate at 5% for flats and 4.75% for houses. A longer lease means the reversion is further away and therefore worth less in today's money.

2. Marriage Value (Below 80 Years Only)

Marriage value captures the additional value created when the leaseholder's interest and the landlord's interest are "married" through the extension. After the extension, the combined value of the lease (now essentially freehold-equivalent) exceeds the sum of the two separate interests before the extension. By statute, the leaseholder pays the landlord 50% of this gain.

A crucial input is relativity — the ratio of the current leasehold value to the full freehold value. With 90 years remaining, relativity might be 95%; at 60 years, it could drop to 75%. Published relativity graphs from firms like Gerald Eve and Savills are used in practice and in tribunal proceedings, though the freeholder and leaseholder may argue for different graphs. This is often the most contested element of the entire negotiation.

3. Compensation

In rare cases, the landlord may claim compensation for other losses arising from the extension — for example, a reduction in the value of other property they own. In practice, for most flat lease extensions this element is zero.

The total premium is therefore: Diminution + 50% of Marriage Value + Compensation. For leases above 80 years, the marriage value component disappears entirely, making the calculation significantly cheaper and simpler.

The Leasehold and Freehold Reform Act 2024

The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024 and represents the most significant overhaul of leasehold law in a generation. Among its headline provisions:

• Abolition of marriage value — once implemented, leaseholders will no longer need to pay the 50% marriage value share, potentially saving thousands of pounds on shorter leases.
• Longer extensions — the standard extension will increase from 90 years to 990 years, giving leaseholders near-permanent security without ever needing to extend again.
• Peppercorn ground rent — all extended leases will have ground rent reduced to zero (a peppercorn), confirming the direction set by the 2022 Ground Rent Act for new leases.
• Standardised rates — the government will prescribe the deferment and capitalisation rates by regulation, reducing disputes and making premium calculations more predictable.

As of February 2026, key valuation provisions of the 2024 Act — including the abolition of marriage value and the new prescribed rates — are awaiting commencement through secondary legislation. The calculator above therefore uses the current 1993 Act methodology (including marriage value and the Sportelli rates), which remains in force until the new regime is formally commenced. Leaseholders should monitor announcements from the Department for Levelling Up, Housing and Communities for updates on implementation dates.

The Formal Statutory Route

The 1993 Act gives qualifying leaseholders the right to extend their lease — the freeholder cannot refuse. The formal process follows a strict timetable:

1. Section 42 Notice — the leaseholder serves a formal notice on the freeholder specifying the premium they are prepared to pay and the proposed terms. This fixes the valuation date.
2. Counter-Notice — the freeholder has two months to respond, accepting, rejecting (on limited grounds), or proposing a different premium.
3. Negotiation — the parties negotiate, usually through their respective surveyors. Most cases settle at this stage.
4. First-tier Tribunal — if agreement cannot be reached within six months of the counter-notice, either party can apply to the tribunal, which will determine the premium.
5. Completion — the new lease is granted and registered at the Land Registry.

The entire process typically takes 6–12 months, though complex or contested cases can take longer. Importantly, the leaseholder must pay the freeholder's reasonable legal and valuation costs in addition to the premium itself.

The Informal Route

Many leaseholders negotiate an extension directly with the freeholder outside the statutory framework. This can be quicker, cheaper, and more flexible — the parties can agree any term, not just 90 years, and can include other lease variations.

However, the informal route carries risks. Without the protection of the statute, the freeholder can refuse or demand a higher premium, and there is no recourse to the tribunal. Freeholders may also propose onerous new terms — for example, escalating ground rent clauses — that you would not face under a statutory extension (which always reduces ground rent to a peppercorn).

A common strategy is to serve the formal Section 42 notice to establish your legal rights and fix the valuation date, then negotiate informally in the shadow of those rights. This gives you the flexibility of negotiation with the fallback protection of the statute.

Who Qualifies for a Statutory Lease Extension?

Under the current law, you can claim a statutory lease extension if:

• Your original lease was granted for more than 21 years.
• You have owned the flat (been registered as proprietor) for at least two years.
• The property is a flat (houses have different legislation under the 1967 Act).

The 2024 Act removes the two-year ownership requirement once commenced, meaning new buyers will be able to extend immediately after purchase. This is particularly helpful for buyers who need to extend a short lease as soon as they complete.

Additional Costs to Budget For

The premium is only part of the total expense. Leaseholders should also budget for:

• Your own solicitor's fees — typically £1,500–£3,000 for a straightforward extension.
• Your own RICS surveyor/valuer — £500–£1,500 for the valuation report that supports your proposed premium.
• Freeholder's reasonable legal costs — you are required by statute to pay the freeholder's solicitor and surveyor fees. These typically run £1,000–£3,000 combined, though you can challenge costs that are unreasonable.
• Land Registry fee — a small fee (currently £40–£270 depending on the premium) to register the new lease.
• Stamp Duty Land Tax (SDLT) — payable on lease extension premiums above £125,000. Most residential extensions fall below this threshold, but high-value London properties may attract SDLT.

In total, professional fees and disbursements often add £3,000–£7,000 on top of the premium. While this sounds significant, it is usually a fraction of the value the extension adds to your property.

When Should You Extend?

The short answer is: as soon as possible. Because a lease is a wasting asset, the premium increases every year you delay. The increase is gradual above 80 years but accelerates sharply as you approach and fall below the 80-year threshold.

If you are thinking of selling within the next few years, extending first almost always makes financial sense. The increase in the sale price typically far exceeds the premium paid. Buyers pay more for long leases, and many are put off by short-lease properties altogether.

Some leaseholders delay in the hope that the 2024 Act's cheaper valuation regime will be implemented soon. This is a gamble — every year of delay costs you in higher premiums under the current regime, and there is no guaranteed date for the new rules. For leases approaching 80 years, the risk of waiting is particularly acute because the marriage value cliff edge is imminent. Read our guide on whether to wait for marriage value abolition for a detailed analysis. Most specialist advisers recommend proceeding under the current law rather than waiting for legislative changes that may be months or years away.

Common Pitfalls to Avoid

• Accepting the freeholder's first offer — freeholders often quote premiums well above the likely statutory figure. Always get an independent RICS valuation before agreeing a price.
• Agreeing to new onerous terms — in an informal extension, the freeholder might try to insert escalating ground rent, restrictive clauses, or other unfavourable provisions. A statutory extension avoids this risk.
• Missing the two-year deadline — you must have owned the flat for two years before serving a Section 42 notice. If you are buying a flat with a short lease, ask the seller to serve the notice before completion and assign the benefit to you.
• Letting the notice lapse — once you serve a Section 42 notice, you have six months after the counter-notice to apply to the tribunal or agree terms. If you let this deadline pass, the notice lapses and you cannot serve another for 12 months.
• Ignoring ground rent escalation clauses — doubling ground rent every 10 or 15 years can make the ground rent extremely high and the cost of the extension significantly more expensive. This is a common trap in modern leases that increases the premium payable.

Frequently Asked Questions

The Bottom Line

A lease extension is one of the best investments a leaseholder can make. It protects the value of your home, ensures continued mortgageability, eliminates ground rent, and gives you security for decades to come. The cost is driven primarily by your remaining lease length, the property's value, and whether you sit above or below the 80-year marriage value threshold.

Use the calculator above to get a sense of what you might pay, then take professional advice. A specialist lease extension surveyor and solicitor will ensure you pay a fair premium and avoid the pitfalls that trip up unprepared leaseholders. The law is firmly on your side — you have a right to extend — and the sooner you exercise it, the less it will cost.