| Lease Extension 2026 — Key Facts | |
|---|---|
| Statutory right | Flat leaseholders have an absolute right to extend (1993 Act) |
| 2-year rule | Removed under the Leasehold and Freehold Reform Act 2024 for new claims |
| Extension length | 990 years added to current term; ground rent reduced to peppercorn (£0) |
| Marriage value | Abolished under the 2024 Act — previously added cost for sub-80-year leases |
| Notice | Section 42 notice served on freeholder to trigger statutory route |
| Your costs | You pay both your own and the freeholder's reasonable legal and valuation costs |
A short lease (below 80 years) reduces your property value and makes it difficult to sell or mortgage. The Leasehold Reform, Housing and Urban Development Act 1993 gives flat owners the right to extend by 90 years on top of the remaining term. The Leasehold and Freehold Reform Act 2024 made two key improvements: extended the standard to 990 years, and abolished marriage value. The 2024 Act is being implemented in stages — check current implementation status at gov.uk/leasehold-guidance.
Statutory vs Informal Extension
| Route | Process | Advantages | Risks |
|---|---|---|---|
| Informal | Approach freeholder directly; agree terms | Faster; flexible; potentially cheaper | Freeholder can withdraw; no enforceable timeline |
| Statutory (Section 42) | Serve formal notice; freeholder must respond in 2 months | Legally binding; freeholder cannot refuse; strict timelines | Both parties legal costs; valuation dispute possible |
How the Premium Is Calculated
The statutory premium uses a three-part formula under Schedule 13 of the 1993 Act: (1) diminution in value of the freeholder's interest (capitalised ground rent stream); (2) freeholder's share of marriage value (now abolished under the 2024 Act); (3) any other freeholder loss including development value. In practice the premium for most residential leaseholders is driven by the capitalised ground rent and reversion value. Always obtain a formal RICS valuation before proceeding.
| Remaining lease | Rough premium (typical London flat, £400k value) | Notes |
|---|---|---|
| 90+ years | £5,000-£15,000 | Low urgency; still worth extending |
| 80-90 years | £10,000-£25,000 | Extend before hitting 80-year threshold |
| 70-80 years | £20,000-£45,000 | Marriage value abolished — lower cost than pre-2024 |
| 60-70 years | £35,000-£70,000+ | Very hard to mortgage; extend urgently |
| Under 60 years | £50,000-£100,000+ | Severe negative value impact |
| ⚠ Warning: Figures above are illustrative only. Premium depends on ground rent, years remaining, property value and deferment rate. Always get a formal RICS valuation. |
Step-by-Step Statutory Process
Step 1 — Instruct a specialist leasehold solicitor (look for ALEP members).
Step 2 — Commission a RICS valuation to establish the likely premium range. Typical cost: £400-£800.
Step 3 — Serve the Section 42 notice on the freeholder specifying your proposed premium. This is irrevocable once served.
Step 4 — Await the counter-notice. The freeholder has 2 months to respond. Negotiate. If no agreement within 6 months of the counter-notice, apply to the First-tier Tribunal (Property Chamber) to determine the premium.
Step 5 — Complete the lease extension deed, pay the premium, and register the new lease at HM Land Registry (AP1 form). Total process: 3-12 months.
The 80-Year Threshold
The 2024 Act abolished marriage value for statutory extensions. However, until commencement regulations are fully enacted some pre-2024 rules may still apply in certain cases. Under the pre-2024 regime, leases below 80 years attracted a 50% marriage value premium adding tens of thousands to the cost. Check current implementation status with your solicitor.
| Disclaimer: This article is for information only and does not constitute financial, legal or tax advice. Figures correct at date of publication but subject to change. Always verify with primary sources (gov.uk, HMRC, FCA register) and consult a qualified adviser before making financial decisions. |
Frequently Asked Questions
Can I extend a buy-to-let leasehold flat?
Yes. The statutory right applies whether you occupy or let. The same process applies.
My freeholder is refusing to engage — what can I do?
Once a valid Section 42 notice is served, the freeholder is legally obliged to respond within 2 months. If they do not, apply to the First-tier Tribunal on the terms in your original notice. Freeholder silence does not defeat a statutory claim.
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