Lease extensions explained: routes, costs and the 2024 reforms

Why the length of your lease matters

A lease gives you the right to own a home for a fixed number of years, and that number falls every year. As it shortens, the home tends to become harder to sell or mortgage, and costs more to extend. For example, a 125-year lease granted in 1990 has about 89 years left in 2026, and it will reach 80 years in 2035.

The 80-year point matters because, under the current rules, extending a lease with 80 years or less remaining usually costs noticeably more. Many mortgage lenders also set a minimum remaining term, both when they lend and at the end of the mortgage. If your lease is getting close to these levels, it is worth getting advice early from a conveyancer (a solicitor or licensed conveyancer) who handles lease extensions.

Two ways to extend: statutory or informal

If you own a flat, there are two main routes. The statutory route, meaning the procedure set out in law (the Leasehold Reform, Housing and Urban Development Act 1993), gives qualifying leaseholders the right to a new lease on set terms. The informal route is a private agreement with your landlord, who is usually the freeholder (the owner of the building).

The statutory route gives certainty about what you will get, with strict deadlines and a tribunal (an independent body that settles disputes) if you cannot agree. The informal route can be quicker and sometimes more affordable, but the landlord does not have to agree and can propose less favourable terms. Some leaseholders start informally and keep the statutory route in reserve.

How the statutory route works for flats

You usually qualify if your lease was originally granted for more than 21 years. Since 31 January 2025 you no longer need to have owned the flat for two years, so you can start once you are the registered owner. You get 90 years added to your remaining term, and the ground rent (the yearly rent paid to the landlord) is reduced to a peppercorn, which in practice means nothing.

The process follows a set order. The main steps are:

• a valuer, usually a surveyor experienced in leasehold work, advises on the premium, the price you pay the landlord
• your solicitor serves a formal notice on the landlord, often called a section 42 notice, proposing a premium and setting a date at least two months ahead for the landlord's reply
• the landlord can ask for a deposit of 10% of your proposed premium or £250, whichever is greater, and can inspect and value the flat
• the landlord replies with a counter-notice, its formal response, either accepting your right and proposing its own terms or disputing your right
• if you cannot agree, either side can apply to the First-tier Tribunal (Property Chamber) in England or the Leasehold Valuation Tribunal in Wales, between two and six months after the counter-notice

Missing a deadline can be costly. If your notice is withdrawn or treated as withdrawn, you usually cannot serve a new one for 12 months, and you may still have to pay the landlord's costs.

How the premium is worked out

Under the current rules, the premium is based on a valuation that compensates the landlord for what it gives up. A valuer looks mainly at:

• the ground rent the landlord would have received for the rest of the current lease
• the landlord's right to get the flat back when the lease ends, which a longer lease pushes much further into the future
• marriage value, where the lease has 80 years or less left when your notice is served

Marriage value is, in simple terms, the extra value created by extending the lease, and under the current law the landlord is entitled to half of it. As an illustration, if extending would create £30,000 of extra value, around £15,000 could be added to the premium. That is why acting before the 80-year point often makes a real difference.

The informal route and what to check

With an informal extension, you and the landlord agree the terms privately, which can suit both sides when the landlord is responsive and the price is fair. The trade off is less protection, because the landlord can refuse, stop negotiating at any time, offer fewer than 90 extra years or change other terms of the lease.

Since June 2022, a new informal extension usually cannot charge ground rent for the extra years, although the landlord can keep charging up to the existing ground rent until the original end date. Before agreeing, check with your solicitor:

• the length of the new lease and the total premium
• the ground rent until the original end date, and whether it can still rise under the existing terms
• any other changes to the lease, such as new charges or restrictions
• who pays the landlord's legal and valuation costs, which you usually pay on an informal deal

Get your own valuation, so you can compare the offer with the statutory route. If you qualify, you can switch routes if negotiations stall.

The Leasehold and Freehold Reform Act 2024

The Leasehold and Freehold Reform Act 2024 is changing the rules in stages. The two year ownership rule was removed on 31 January 2025, but most of the changes affecting the cost and terms of lease extensions are not yet in force. When they are, they are expected to include:

• a standard extension of 990 years for flats and houses, with no ground rent
• the removal of marriage value, so leases with 80 years or less left no longer carry that extra charge
• a standard way of calculating the premium, using rates set by the government
• in most cases, each side paying its own legal and valuation costs instead of the leaseholder paying the landlord's

These changes are not in force yet. The government has consulted on the costs of the process and the valuation rates, which will be set in regulations, and plans to fix some issues in the 2024 Act through a forthcoming Commonhold and Leasehold Reform Bill; no start date has been set (GOV.UK). LEASE, the government funded leasehold advice service, explains the rules as they stand. Whether to wait or act now depends on your lease length, your plans and the risk of further delay, so discuss it with your solicitor and valuer. Your conveyancer will tell you what applies on the date of your transaction.

Costs and timescales

A lease extension involves more than the premium. Under the current rules, the costs usually include:

• the premium paid to the landlord
• your own solicitor's and valuer's fees
• the landlord's reasonable legal and valuation costs, which you usually pay on the statutory route and often on an informal one
• HM Land Registry's fee to register the new lease, and any fees a managing agent charges
• any tax due on the premium, which your conveyancer will check

Timescales vary widely. An informal deal with a responsive landlord can sometimes be agreed within a few weeks to a few months. The statutory route often takes several months, because the landlord has at least two months to reply and negotiations follow, and it can take a year or more if the tribunal has to decide.

Leasehold houses

Leasehold houses are covered by a different law, the Leasehold Reform Act 1967. Under the current rules, a qualifying leaseholder can extend the lease once by 50 years, with a modern ground rent (a new rent set by a formula, usually higher than before) for the extra period, or can buy the freehold, which means owning the house and land outright. Because the extension terms are less generous than for flats, house owners often look at buying the freehold instead.

The 2024 Act is expected to bring houses into line with flats, including 990-year extensions, but these changes are not yet in force. Your conveyancer can explain the options for your house, and you can read more about buying your freehold.

Your checklist

Here is how the work usually divides between you and the professionals. If you are selling, ask about starting a statutory claim and passing it to your buyer on completion.

• You: find your lease and check exactly how many years are left
• You: tell your mortgage lender, which will usually need to agree to an informal extension
• You: instruct a solicitor and a valuer who regularly handle lease extensions
• You: keep to deadlines and reply quickly when your solicitor needs instructions
• Your valuer: advises on a realistic premium and negotiates with the landlord's valuer
• Your solicitor: checks that you qualify, serves the notice, deals with the counter-notice and agrees the new lease
• Your solicitor: registers the new lease at HM Land Registry and confirms your new term

Next steps

Lease extensions are specialist work, so Keyfolio prepares a tailored quote instead of an instant one, usually within one working day. You can request a lease extension quote or read more about lease extensions. For a rough idea of the premium before you speak to a valuer, LEASE offers a lease extension calculator, which gives an estimate only.