What Is a Lease Extension and Why It Matters
A lease extension is a critical aspect of property ownership for leasehold properties. Securing an extended lease and removing the ground rent can safeguard your investment and increase the value of your property. This guide explores the key elements of lease extensions, such as ground rent, marriage value and section 42 notices, landlords costs and how to navigate the process effectively.
Leasehold properties are common in England and Wales, particularly for flats and apartments. Whilst less common, we also see leasehold houses in some areas. Unlike freehold ownership, leasehold grants you the right to use the property for a set term, typically 99 or 125 years. It is also common to pay a ground rent to the freeholder or landlord.
Your Legal Rights Under the Leasehold Reform Act 1993
The lease term reduces each year, with the flat ultimately reverting to the freeholder at the end of the lease. In reality, given the value of a residential leasehold property, the leaseholder or tenant will always extend their lease term before it runs out. In practice, most will extend once the lease is approaching or under 100 years, for reasons we set out below.
An important added benefit of extending the lease is the removal of any ground rent for the remainder of the lease term. From completion of the new lease, it will cease to be payable, and this is a particularly useful benefit for those with onerous ground rents such as doubling ground rent or RPI link ground rents.
Are you affected by onerous ground rents? Read more on our in depth guide to doubling ground rent here.
What is ground rent?
Historically ground rents would be a fixed payment of £10 per annum for the duration of the lease. This is likely still the case for local authority leases.
Unfortunately in modern times, the property investment market has created aggressive and fast rising ground rents, that are anything but nominal sums. In the more extreme cases, these annual payments can make the property impossible to sell, leaving leaseholders trapped with a devalued asset, unable to move home.
Understand how ground rent affects your lease extension premium in our deep dive explanation
The issue with ground rent is that unlike the non-payment of other debts, non payment of these sums can lease to forfeiture of the lease, not to mention the legal costs in enforcement by the landlord.
Understanding Ground Rent and Marriage Value
As this term diminishes, particularly when it falls below 80 years, the property’s market value can decrease, and obtaining a mortgage or selling becomes more challenging.
A lease extension involves increasing the length of the lease term, often by 90 years, while reducing ground rent to a peppercorn. This process ensures your property remains a valuable asset and avoids additional costs, such as the "marriage value" premium, which applies when extending a lease below 80 years and which adds significantly to the costs of the process.
Benefits of Extending a Lease
1. Increase Property Value: A longer lease makes your property more attractive to buyers and lenders.
2. Avoid Marriage Value Costs: Extending before the lease drops below 80 years can save thousands in additional premiums.
3. Secure Long-Term Ownership: An extended lease provides stability and peace of mind.
4. Reduce Ground Rent: Statutory lease extensions eliminate ground rent, reducing future financial liabilities. They can therefore be a useful tool against doubling or RPI ground rents.
The two types of Lease Extensions
There are two primary ways to extend your lease, the statutory process or the informal process.
1. Statutory Lease Extension process
Under the Leasehold Reform, Housing, and Urban Development Act 1993, qualifying leaseholders have the legal right to a statutory lease extension. This process includes:
Adding 90 years to the existing lease.
Reducing ground rent (including any problematic doubling ground rent) to a peppercorn (effectively zero).
To qualify, you must be the registered owner at the Land Registry, and the lease must originally have been for a term of over 21 years. Note that there is no longer a need to have owned the property for two years, this requirement was abolished in early 2025.
Advantages of s.42 Lease Extension process:
Clear legal framework with defined timelines (avoiding freeholder delay tactics and failures to respond)
Protection against unreasonable terms in terms of premium or new lease clauses.
ability to apply to the First-tier Tribunal if the freeholder doesnt play ball
2. Voluntary Lease Extension
A voluntary lease extension involves negotiating directly with the freeholder outside the statutory framework. While this can sometimes be quicker, it often comes with less favourable terms, such as higher premiums, continued ground rent, or additional clauses.
It is unfortunately common for unreasonable demands to be raised late in the day, and after a costs undertaking has been given. This is therefore a riskier route though it is often presented as an easier route by freeholders, backed by a time limit for the leaseholder to proceed.
Key Considerations for Voluntary Extensions
Always review the terms carefully to avoid hidden costs.
Seek expert legal advice to ensure fairness.
Do not enter into negotiations with your landlord unless you've had valuation advice, or at the very least, used a lease extension calculator
How much does a lease extension cost?
The cost of a statutory lease extension is made up of several components, including:
Premium: The payment to the freeholder for extending the lease, for which you can use a lease extension cost calculator like this one.
Valuation Fees: To determine the premium. Both yours and your freeholders
Legal Fees: For both the leaseholder and the freeholder.
Tribunal Costs: If disputes arise, you may need to apply to the First-tier Tribunal. Though it is rare for a full First-trier Tribunal Hearing to happen.
Expenses - a registration fee for the new lease, ID verification fee for your solicitor, copy titles and leases, all of which your solicitor will need to complete the administrative side of providing you with quality legal advice
We go into more detail on typical lease extension costs in this explainer.
The premium calculation includes factors like the property’s current value, the remaining lease term, the ground rent and how this increases (such as doubling ground rents or RPI ground rents) and the potential marriage value. It’s essential to hire a qualified surveyor to ensure accurate valuation.
Steps to Extend Your Lease
1. Check Eligibility: Ensure you qualify for a statutory lease extension.
2. Appoint Professionals: Hire a solicitor and surveyor experienced in lease extensions. ideally before negotiating with your freeholder (who is under no obligation to be fair or transparent)
3. Serve the section 42 notice: For statutory extensions, serve a Section 42 notice on the freeholder, outlining your intent and proposed terms.
4. Negotiate Terms: The freeholder has two months to respond. Negotiations may follow to agree on the premium and terms.
5. Complete the Process: Finalise the lease extension through legal documentation and registration at the Land Registry .
Common Challenges in Lease Extensions
- Disputes Over Premiums: Freeholders may demand higher premiums. An independent surveyor appointed for the leaseholder can ensure the correct premium is paid. Note that the freeholder will almost certainly appoint an experienced valuer.
- Freeholder Delays: Statutory timelines protect against unnecessary delays, but voluntary extensions may lack this safeguard.
- Complex Legal Terms: Working with a solicitor ensures all terms are clear and fair.
- Unauthorised alterations: freeholders valuers will sometimes try to find an issue where non exists to gain leverage in negotiations. Advise your solicitor in advance if any work has been carried out to the flat without the freeholders expressed consent.
When should I extend?
We discuss the benefits of waiting for leasehold forms in some detail in this article. Acting early to secure an extended lease can save significant time and money. As the lease term diminishes and property prices increase, the premium will go up. However it is a nuanced decision that depends on a number of factors i.e. what is right for your friend or neighbour may not be right for you.
We've prepared a table to set out whether there is a clear benefit to waiting for leasehold reforms or not, depending on the lease length. Though you should take advice in each case, as other factors will come into play which will vary:
✅ Recommended Action | 💡 Reasoning | |
⏳ Lease below 80 years | 🛑 Wait (if possible) | 🔓 Reforms may abolish marriage value by 2029. Waiting could mean substantial premium savings. |
⚠️ Lease between 80–84 years | ➡️ Extend now | ⛔ Risk of dropping below 80 years, triggering marriage value. Reforms may not benefit this group as much. |
📈 Lease above 100 years | 🔍 Consider waiting | ⚖️ Reforms may lower legal/valuation costs and remove landlord’s fees, but premium could rise. Still likely saleable. |
💸 Ground rent above 0.1% of flat value | ⏱️ Wait (if applicable) | 🧾 Reforms could cap or eliminate excessive ground rent, offering long-term financial benefit. |
🏡 Planning to sell or remortgage | ✍️ Extend now | 🔑 A short lease may affect saleability and mortgageability. Extending improves marketability. |
Do you need a solicitor to handle the paperwork?
Absolutely. The way we look at this is; would your freeholder gain an advantage if they could? Lease extensions are legally and financially intricate, requiring expert guidance to navigate effectively. An experienced solicitor can:
Handle complex negotiations with the freeholder.
Ensure you pay the correct amount for your new lease
Prevent you agreeing to onerous lease terms in deed of surrender and lease
Ensure compliance with statutory requirements.
Protect your rights and avoid costly mistakes.
Note that this is a different legal discipline to conveyancing, and care must be taken to ensure you are properly advised. Mistakes can be extremely expensive to remedy. We set out the steps taken by a lease extension solicitor in this article.
How long does a lease extension take?
In our experience of handling thousands of cases, it is common for a lease extension to take between four and 10 months. However there are outliers; and our longest running case involving an extremely difficult freeholder is ongoing after two and a half years. By contrast a local authority lease extension can be dealt within in 3-4 months.
We go into much more detail on this specific question, in our post on the factors that affect how long the section 42 process takes.
Lease extensions and leasehold reform in 2025
The UK government intends to introduce various reforms to simplify the leasehold system and make it fairer for leaseholders. In 2025 announcements were made to abolish the two year rule, which is now law, and further changes are expected to marriage value and other parts of the process.
Further proposed changes include capping ground rent when calculating lease extension premiums, removing some freeholders recoverable legal costs, creating a standardised valuation formula or lease extension calculator, and allowing leaseholders to extend their lease to 990 years. Staying informed about these reforms is crucial for making the best decisions regarding your property.
As of October 2025, the Government succeeded in defeating a Judicial Review action brought by a group of wealthy freeholders. The way is now clear for the reforms to be enacted through secondary legislation, though the government is yet to finalise what the new set deferment rates will be when calculation the lease extension premium.
How Peppercorn Law Can Help You Extend Your Lease
We advise clients across the world on flats based in England and Wales, with out remote client on boarding and use of esignatures meaning we typically get started on our work within a days rather than weeks.
Have a look at our fixed fee lease extension service in Hastings, Bexhill, Eastbourne, Lewes, Brighton, Hove, Littlehampton, Bognor Regis, Uckfield and Crawley.
Frequently asked questions
What is marriage value?
What is a s.42 notice?
Do I have to pay my freeholders cost of the lease extension?