Lease Extensions

A leasehold flat with a short remaining term loses value and becomes difficult or impossible to mortgage. Most mortgage lenders will not lend on a lease with fewer than 70 to 85 years remaining at the end of the mortgage term; lenders' specific policies vary. Leases with fewer than 80 years remaining also attract marriage value in the calculation of the extension premium under current law, which increases the cost of extending. Acting before a lease drops below 80 years has historically reduced the extension cost.

A leaseholder with a qualifying lease may extend it by the statutory route under the Leasehold Reform, Housing and Urban Development Act 1993 — which imposes set terms and a tribunal-determined premium if the parties cannot agree — or may negotiate an informal extension directly with the landlord on agreed terms. Both routes are documented below.

Statutory Lease Extension

Under the Leasehold Reform, Housing and Urban Development Act 1993, a qualifying leaseholder of a flat has the right to require the landlord to grant a new lease. The current statutory terms provide for an extension of 90 years added to the unexpired term of the existing lease; a peppercorn ground rent for the extended term; and otherwise the same lease terms as the existing lease, unless varied by agreement or tribunal determination. The premium is calculated on a statutory basis: the landlord's loss of ground rent, plus marriage value where the unexpired term is below 80 years, plus the diminution in the value of the landlord's reversion.

A leaseholder qualifies if their lease was originally granted for a term of more than 21 years and they own the flat. The two-year ownership requirement — which previously required a leaseholder to have owned the flat for at least two years before making a claim — was removed with effect from 31 January 2025 by the Leasehold and Freehold Reform Act 2024 (SI 2025/57). A leaseholder who acquires a flat on any date from 31 January 2025 may serve a statutory notice immediately on acquisition (subject to the Land Registry application being processed).

The statutory process begins with the leaseholder serving a tenant's notice under section 42 of the 1993 Act. The landlord must serve a counter-notice within two months. If the parties cannot agree a premium, either may apply to the First-tier Tribunal for a determination. Where no counter-notice is served, the leaseholder may apply to the tribunal for an order that the landlord grant the new lease.

Informal Lease Extension

A leaseholder may approach the landlord informally to negotiate a lease extension without invoking the statutory route. An informal extension can be agreed on any terms the parties accept — a longer term, a different ground rent (including a continuing financial ground rent, which the statutory route replaces with a peppercorn), or other conditions. There is no statutory floor or ceiling on informal negotiations.

The informal route offers potential speed and lower professional costs if the landlord agrees readily. Its limitations are significant: the landlord is not obliged to engage or to grant an extension; if the landlord refuses, the leaseholder has no remedy other than commencing the statutory route; any financial ground rent agreed informally continues to run under the new lease, unlike the statutory peppercorn; and the leaseholder's professional costs are not recoverable from the landlord in the way that they may be where a formal statutory process is underway.

A leaseholder may begin negotiations informally and, if those negotiations do not progress satisfactorily, revert to serving a statutory notice under the 1993 Act. The two routes are not mutually exclusive; the statutory route preserves the leaseholder's position if informal discussions stall.

Changes Under the Leasehold and Freehold Reform Act 2024

The Leasehold and Freehold Reform Act 2024 makes three significant changes to the lease extension regime. Their commencement status differs.

The two-year ownership requirement has been removed (section 27, LFRA 2024). This change is in force from 31 January 2025 under SI 2025/57. A leaseholder may now serve a statutory tenant's notice as soon as the Land Registry transfer is processed, without waiting two years.

The standard statutory lease extension term is increased from 90 years (added to the unexpired term) to 990 years. This provision is in the Act but has not been commenced by order as at June 2026. Statutory lease extensions currently add 90 years under the existing law. The 990-year term is expected to be commenced alongside the valuation reform provisions.

Marriage value is abolished from the premium calculation under the LFRA 2024. This is the most financially significant change — it reduces the cost of extending a short lease by removing the premium attributable to the merger of interests. This provision requires secondary legislation (the valuation rates must be prescribed by regulation) and is not in force as at June 2026. A government consultation on the rates has been delayed by legal proceedings. The High Court dismissed a judicial review challenge in October 2025; permission to appeal was granted to five freeholder groups. No commencement date has been announced for the valuation provisions. See Reform Tracker for current status.

Marriage Value: Current Position

Marriage value is the uplift in the combined value of the landlord's and leaseholder's interests created by the grant of a new lease. Where the unexpired lease term is below 80 years, marriage value arises. Under the current valuation rules, the landlord is entitled to 50% of that marriage value as part of the extension premium. The shorter the remaining term below 80 years, the greater the marriage value element — and therefore the more expensive the extension.

As at June 2026, the current valuation rules — including the 80-year marriage value threshold — remain in force. The LFRA 2024 provisions abolishing marriage value have not been commenced; valuation regulations are required before they can take effect. A leaseholder extending under the current law with a lease below 80 years will pay a premium that includes a marriage value component calculated on the existing basis. A leaseholder with a lease approaching 80 years who extends before the threshold is crossed will not pay marriage value under the current rules. Whether to act before or after the reformed valuation rules come into force is a factual judgment that depends on the specific lease term, the expected premium under each set of rules, and the timing of commencement — which remains unannounced.

When to Act and When to Wait

The relevant timing factors under the current law are as follows. A lease approaching 80 years unexpired becomes subject to marriage value in the premium calculation at the point it crosses the 80-year threshold. Extending before that point avoids the marriage value element under the current rules. A shorter lease is also harder to mortgage and less saleable; the practical urgency often precedes the 80-year threshold. Serving a statutory notice establishes the valuation date: the premium is calculated by reference to market conditions at the date of service, not at the date of any subsequent tribunal determination.

Against this, the LFRA 2024 valuation provisions — if and when commenced — would abolish marriage value, potentially reducing premiums on short leases significantly. A leaseholder with a lease of, for example, 75 years may pay less under the reformed rules than under the current rules. The reformed rules are not in force and no commencement date is set. Pending legal proceedings (a freeholder group's Court of Appeal challenge to the valuation provisions) create further uncertainty about timing. A leaseholder who waits on reformed rules that do not come into force promptly may find the lease term has fallen, and other costs have increased, in the meantime.

This section records the relevant factors. The weight to give each depends on the specific lease and circumstances.