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How Much Does Extending a Lease Cost in 2021?

Emma Lunn

Written by

30th Jul 2021 (Last updated on 30th Sep 2021) 8 minute read

A lease extension is the process of adding years back onto a lease and extending the time you have before the property reverts back into the ownership of the freeholder.

Extending the lease on a leasehold property will increase its value and make it easier to sell – but extending a lease can be a long and expensive process.

Costs for lease extensions vary widely depending on the property value, the length of the lease, how much the property will be worth after the lease extension, the ground rent payable, and the attitude of the freeholder.

This article will cover the following:
  1. What is a Lease Extension?
  2. When Should You Extend your Lease?
  3. How Much Does it Cost to Extend a Lease?
  4. How to Keep Your Lease Extension Costs Down
  5. Why Should You Extend a Lease?
  6. How Do You Extend Your Lease?
  7. How Long Does The Process Take?
  8. Buying the Freehold
  9. Learn More About Conveyancing

What is a Lease Extension?

Owning a leasehold property means you own the right to live in a property for a set period of time rather than own the land it stands on. The land is owned by a freeholder or landlord who will charge a ground rent.

When flats are built leases tend to be for 99 or 125 years. In theory, when this time period is up, the flat is returned to the freeholder or landlord. However, in reality, most leases are extended well before then.

When you extend your lease you’ll need to pay the freeholder a premium. The freeholder is entitled to money when a lease is extended as it means they’ll wait longer for possession of the property and also because once a lease extension is granted there will no longer be any ground rent payable.

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When Should You Extend your Lease?

Ideally you should try to extend your lease before it falls to 80 years or less.

There are two reasons for this: Firstly, lease extension gets more expensive each year, but costs rise more rapidly when there are less than 80 years left; and secondly, it becomes more difficult to mortgage or remortgage a property when there are less than 70 years to run on a lease.

If you’re selling your property, or plan to in the future, potential buyers will be put off by a short lease. So, it’s best to extend your lease before marketing your home for sale.

Part of the calculation for the lease extension premium will depend on the value of the property – the more expensive the property, the more the lease extension will be. So, it can be a good idea to extend a lease while house prices are falling, if possible.

How Much Does it Cost to Extend a Lease?

For a flat with 80 years left on the lease and expected to be worth £400,000 with a lease extension complete, and ground rent of £100 a year, a lease extension will cost from about £7,000 to £10,000 plus costs mentioned below.

The cost of lease extensions varies considerably but the following table shows estimates of the costs involved.

ItemTypical Cost

Lease extension premium

£7,000 - £10,000 (using the earlier example)

Your surveyor’s valuation

£600 - £900

Your solicitor’s fees

£600 - £1,200

The freeholder’s valuation

£600 - £900

The freeholder’s solicitor costs

£600 - £1,200

Surveyor’s negotiation costs

£150 - £200 an hour

Land Registry fees

£20 - £40

The Leasehold Advisory Service has an online calculator that will give you a rough estimate of lease extension costs.

1. The lease extension premium

Usually, the biggest cost of extending a lease is the premium you eventually agree with the freeholder. This could cost anywhere upwards of £5,000.

The premium will depend on:

  • location of the property
  • value of the property
  • lease length
  • ground rent payable
  • how negotiation go with the freeholder

2. Surveyor’s Fees

You’ll need to pay a specialist surveyor to calculate your opening offer to the freeholder. This involves a complex set of calculations, as well as a visit to the property. This valuation could cost between £600 - £900, depending on the size and value of your property.

After your freeholder has submitted a counteroffer, your surveyor will negotiate with them until a premium is agreed.

3. Solicitor’s Fees

Your solicitor fees could average around £600 - £1,200.

You will also need to pay solicitors fees. Your solicitor will serve your Section 42 notice on the freeholder and receive notification when the freeholder’s solicitor serves a section 45 notice in response.

Your solicitor will also read the new lease to check everything is correct and file it with the Land Registry.

4. Freeholder Costs

The Leasehold Reform Act states that the leaseholder must pay the freeholder’s ‘reasonable costs’ for a lease extension.

In theory, the freeholder’s costs should be similar to yours. But in practice, because the leaseholder pays, the freeholder is unlikely to shop around for the cheapest surveyor or solicitor.

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How to Keep Your Lease Extension Costs Down

Here are a few top tips to help keep the cost of extending your lease down:

  1. Make sure you begin the process before your lease falls to 80 years. After this, you will have to pay the freeholder an extra cost called ‘marriage value’ which means a lease extension will get progressively more expensive.
  2. Appoint both a specialist surveyor and specialist solicitor. Scrimping on professional costs could result in you paying over the odds for your lease extension.
  3. Steer clear of informal lease extensions. Your freeholder may offer an informal lease extension rather than one following the Leasehold Reform Act rules. But an informal lease extension doesn’t necessarily add 90 years to your lease or reduce your ground rent to zero. An unscrupulous freeholder may use an informal lease extension to increase ground rent, making the property difficult to sell in the future.

Why Should You Extend a Lease?

If the unexpired term of your lease is for less than 80 years you need to get it extended for two main reasons.

Firstly, a longer lease will maintain or enhance your property’s value and make it easier to sell or remortgage. You, or any potential buyer, will find it hard to get a mortgage if there are less than 70 years left. If you’re selling your property, potential buyers will be put off by a short lease.

Secondly, the two main factors determining the cost of a lease extension are the value of the property and the length of the current lease. Once the lease drops below 80 years the cost of extending it goes up rapidly – so it’s best to get it extended before the 80-year cut off point if you want to do it cheaply.

How Do You Extend Your Lease?

The 1993 Leasehold Reform Act sets out the statutory process for extending a lease. The act gives a qualifying leaseholder the right to be granted a new lease for an additional 90 years from the expiry of their current lease. If 80 years are left to go, a new lease of 170 years (90 plus 80) can be granted in substitution for the existing lease

To qualify you need to have owned the property for at least two years and the lease must have been for more than 21 years when initially granted. Once a lease is extended under the Leasehold Reform Act, there will be no more ground rent to pay on the property.

5 steps to extending a lease

  1. The first step in extending a lease is to get a specialist surveyor to do a valuation. This involves a complex set of calculations. The surveyor will look at the current length of the lease, the property’s location, ground rent, terms in the lease, and the value of the flat with and without the lease extension.
  2. The surveyor will then suggest an opening offer to the freeholder. You’ll use this figure to serve a section 42 ‘Tenant’s Notice’ notice on the freeholder.
  3. The section 42 notice triggers a timetable under which the freeholder has at least two months in which to respond and serve their own notice – the landlord`s counter notice or section 45 notice. This will include the freeholder’s opening offer. Don’t be surprised if this figure is twice your offer –your surveyor will then negotiate with the landlord’s surveyor to get a price both sides agree on.
  4. If you can’t agree a price within two months you can make an application to the Leasehold Valuation Tribunal (LVT). The LVT can make a ruling on what is a fair price for the lease extension but it’s an expensive process.
  5. Once a price is agreed you’ll need a solicitor to do the necessary paperwork and draw up a new lease. Once it’s been signed by both parties your conveyancing solicitor will register the new lease with the Land Registry.

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How Long Does The Process Take?

It typically takes 3 to 12 months to extend your lease.

Extending your lease under the process set out in the Leasehold Reform Act means things must be done within a statutory timeframe. The freeholder must respond to the section 42 notice with a section 45 notice within two months. After the section 45 notice has been served, negotiations can take up to six months.

How quickly things proceed depends on how quickly you can agree a price. After it’s been agreed it can take one to three months to finalise the lease and another few months to register the new lease with the Land Registry.

Buying the Freehold

Buying your freehold is an alternative to extending your lease. But if you live in a block of flats, you’ll need at least half the other leaseholders to agree to buy the freehold as a group. This is known as ‘collective enfranchisement’.

It can be a long process but collective enfranchisement is ultimately worthwhile as once the leaseholders own the freehold you’ll have a lot more control over how the building is run and the costs for maintenance. As with extending a lease, your ground rent will become zero.

Learn More About Conveyancing

This has been part of our conveyancing guide. In the next guide, we take a look at compulsory purchase orders. To learn more, read what is a compulsory purchase order.

Emma Lunn

Written by Emma Lunn

Freelance Personal Finance Journalist,

Emma Lunn is an award-winning journalist who specialises in personal finance, consumer issues and property.

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