A client came to us last year with what seemed like a simple problem: she wanted to sell her flat in Twickenham. The property was attractive, well maintained, and in a popular part of town. But when she started talking to estate agents, they kept coming back to the same issue — the lease had 74 years left to run.
"Seventy-four years sounds like plenty," she told me. "I haven't even been alive that long."
The problem, I explained, is that once a lease drops below 80 years, two things happen almost simultaneously. First, buyers' mortgage lenders become reluctant (and then unwilling) to lend. Second, the cost of extending the lease increases significantly because of a factor called 'marriage value.' Her flat was in a grey zone: sellable, but only to cash buyers, and at a significant discount to its potential value.
We prepared a lease extension valuation. The premium to extend to a 125-year lease was calculated at £18,500. But crucially, the extension added approximately £35,000 to the value of the property. She extended the lease, sold six months later for full asking price, and netted £16,500 more than she would have done selling with the short lease.
That's what a RICS-qualified lease extension valuation can do for you.
What Is a Lease Extension?
Most residential flats in England and Wales are owned on a leasehold basis — meaning you own the property for a fixed term (the lease) rather than permanently. When you buy a flat, you might have 125 years on the lease. Over time, that number reduces. A flat with 60 years left on the lease is a very different proposition from one with 120 years.
A lease extension adds years to the remaining term of your lease. Under the Leasehold Reform, Housing and Urban Development Act 1993, qualifying leaseholders have a legal right to extend their lease by 90 years (on top of the existing term) and to reduce the ground rent to a 'peppercorn' (effectively zero) — in exchange for paying a premium to the freeholder.
Why Lease Length Matters
Here are the key thresholds you need to be aware of:
- Below 90 years: Many mortgage lenders start to add conditions or requirements. Buyers may struggle to get a mortgage.
- Below 80 years: The critical threshold. Once a lease drops below 80 years, 'marriage value' kicks in. This is an additional component of the premium you pay to extend the lease — it can double or treble the cost. Extending before you hit 80 years is almost always significantly cheaper.
- Below 70 years: Mainstream mortgage lending becomes very difficult. Your pool of potential buyers shrinks dramatically. Your property value suffers materially.
- Below 60 years: Some lenders won't lend at all. Selling becomes extremely difficult without first extending.
The Formal (Statutory) Route
The formal route uses your statutory right under the 1993 Act. Here's how it works:
- Commission a lease extension valuation — a RICS Registered Valuer calculates the premium the freeholder is entitled to receive
- Serve a Section 42 Notice — the formal legal trigger, served on your freeholder by a specialist solicitor
- The freeholder responds — within 2 months, with a counter-notice either accepting or challenging your proposed premium
- Negotiation — typically between your surveyor and the freeholder's surveyor
- Agreement or Tribunal — if agreement can't be reached, either party can apply to the First-tier Tribunal (Property Chamber) for a determination
The formal route takes approximately 6–12 months from start to finish in most cases.
The Informal Route
Many lease extensions are negotiated informally — simply approaching the freeholder and agreeing a premium without invoking the formal statutory process. This can be faster and cheaper (no Section 42 Notice costs), but you have less legal protection. In particular, you cannot force the freeholder to agree terms, and the terms you negotiate may not be as favourable.
Whether to use the formal or informal route depends on your freeholder's attitude, the relationship between landlord and tenant, and the urgency of the situation. We always advise clients to at least prepare a valuation before approaching informally — knowing the correct premium prevents you from overpaying.
How Much Does a Lease Extension Cost?
The premium payable to the freeholder depends on several factors:
- The current lease length
- The property value
- The ground rent payable
- Whether 'marriage value' applies (leases below 80 years)
As a very rough guide for a typical Hampton or Twickenham flat:
- 90+ year lease: from approximately £5,000–£12,000
- 80–90 year lease: from approximately £8,000–£18,000
- 70–80 year lease: from approximately £15,000–£35,000+
- Below 70 years: highly variable, potentially £30,000–£60,000+
These are illustrative figures only — the only way to get an accurate figure is to commission a proper lease extension valuation. At Hampton Surveyors, these start from £395.
In addition to the premium, you'll need to budget for your solicitor's fees (typically £1,500–£3,000), your surveyor's fees, and the freeholder's reasonable legal and surveying costs (which you are generally required to pay).
Do You Qualify for a Lease Extension?
To qualify for the statutory right to extend your lease, you must:
- Have owned the property for at least two years
- Be the current leaseholder (not a sub-tenant)
- Own a residential flat (houses have different leasehold reform rights)
There are some exclusions (certain National Trust properties, etc.) but most residential leaseholders in Greater London qualify.
Lease Extension FAQs
Yes — if the vendor has owned the property for at least two years, they can assign their right to extend to you as part of the sale (this is called a 'Notice of Assignment'). You can then serve the Section 42 Notice immediately after completion. Always discuss this with your solicitor before exchanging contracts.
It can complicate matters, but it doesn't prevent you from extending. Where a freeholder cannot be located, there is a procedure to apply to the court for a vesting order, allowing the lease extension to proceed without the freeholder's direct involvement.
Ground rent is an annual fee paid by a leaseholder to the freeholder. Following the Leasehold Reform (Ground Rent) Act 2022, new leases cannot have ground rents above a peppercorn. However, older leases may have escalating ground rents that can make properties hard to sell or mortgage. One major benefit of a statutory lease extension is that it reduces your ground rent to a peppercorn — effectively zero — going forward.
Need a Lease Extension Valuation?
Hampton Surveyors' RICS Registered Valuers provide lease extension valuations and advisory services across Greater London.
Get Lease Extension Advice Leasehold Services