Lease Extension Cost and Process for Flats

A statutory lease extension gives the leaseholder of a flat the right to a new lease expiring 90 years after the term date of the existing lease, at a peppercorn rent, in exchange for a premium. The right sits in Chapter II of the Leasehold Reform, Housing and Urban Development Act 1993. It starts with a notice under section 42, runs to a fixed timetable, and ends in an agreed premium or a tribunal determination. The Leasehold and Freehold Reform Act 2024 will change both the term and the valuation, but as at August 2026 neither of those changes has been commenced.

This is written for England. The 1993 Act extends to England and Wales, so the mechanics apply in both. Scotland and Northern Ireland have separate systems.

Two Ways to Extend: Statutory Claim or Informal Deal

The statutory route is a right, not a request. Section 56(1) fixes what you get: a term expiring 90 years after the term date of the existing lease, at a peppercorn rent, with the premium set under Schedule 13. Section 57 requires the new lease to be on the same terms as the existing one, subject to limited modifications, so the landlord cannot use it to rewrite your obligations. If the parties cannot agree, the tribunal decides.

An informal extension is just a contract. There is no statutory term, no peppercorn rent, no protection on the other lease terms and no tribunal to appeal to. It can be quicker, but the risk lies in what the freeholder wants in return, usually keeping or restructuring the ground rent, so check what has actually changed on ground rent before agreeing to any rent that survives. Price the statutory claim first and compare: it is always your fallback, and that is your leverage.

Statutory claim compared with an informal extension
	Statutory claim (section 42)	Informal extension
New term	90 years beyond the existing term date (s.56(1))	Whatever is agreed
Ground rent	Peppercorn (s.56(1))	May be kept or restructured
Other terms	As existing, with limited modifications (s.57)	Open to negotiation
If the landlord refuses	Tribunal or court settles terms and price	No remedy
Landlord’s costs	Investigation, valuation and grant only (s.60)	Often uncapped
Timetable	Fixed statutory deadlines	None

Do You Qualify?

You must be a qualifying tenant of a flat, which section 5(1) defines as a tenant under a long lease, applied to lease extension claims by section 39(3).

Section 7(1) defines a long lease. The usual case is one granted for a term of years certain exceeding 21 years. It also covers perpetually renewable leases, right to buy leases, and shared ownership leases where the tenant’s share is 100 per cent.
It is the term originally granted that counts, not the term left: a 99 year lease with 40 years to run still qualifies.
Section 5(2) excludes business leases, and leases where the immediate landlord is a charitable housing trust and the flat is housing provided for its charitable purposes.
You need not live in the flat, and section 39(4) lets one person qualify on several flats.

Section 27 of the 2024 Act deleted section 39(2) of the 1993 Act, which had required you to have been a qualifying tenant for the last two years. It came into force on 31 January 2025 under the Commencement No. 2 Regulations. A buyer can now serve a section 42 notice on completion instead of taking an assignment of the seller’s notice.

The Section 42 Notice

The claim is made by notice under section 42, given to the landlord and to any third party to your lease, which in a block with a resident management company usually means the company as well as the freeholder. Section 42(3) requires the notice to specify:

Your full name and the address of the flat.
Particulars identifying the property and the lease, including the date it was entered into and the term granted.
The premium you propose, and any other Schedule 13 amount.
The terms you propose for the new lease.
The name and address of any representative you appoint.
The date by which the landlord must give a counter-notice.

Two of those cause most of the trouble. The proposed premium must be a genuine figure you can justify, so value before the notice goes out. The counter-notice date must, under section 42(5), be at least two months after the notice is given; setting it earlier is a defect. Read the lease clauses that matter first, because the term date, the rent and any review clause drive the valuation.

Once given, the notice binds you. Only one can be in force at a time, and withdrawing it bars a further notice for 12 months. The landlord may also require a deposit, set by the 1993 Regulations at £250 or 10 per cent of the premium you propose, whichever is the greater, payable within 14 days of the demand and held as stakeholder. So an artificially low opening figure carries a cost of its own.

What Happens After the Notice

Under section 45 the landlord must respond by the date you specified, either admitting that you had the right at the relevant date, denying it with reasons, or doing either while also stating an intention to apply under section 47. If the right is admitted, the counter-notice must say which of your proposals are accepted, give counter-proposals for the rest, and give an address in England and Wales for service.

The redevelopment ground is narrow. Section 47 requires the lease to be due to terminate within five years beginning with the relevant date, the landlord to intend to demolish or substantially reconstruct the whole or a substantial part of the building, and the work to be impossible without possession of your flat.

Statutory deadlines in a section 42 claim
Step	Deadline	Source
Landlord’s counter-notice	The date in your notice, at least two months after it is given	ss.42(5), 45(1)
Landlord’s redevelopment application	Two months from the counter-notice, and only if the lease ends within five years	s.47
Tribunal application where terms are disputed	Not before two months, and not later than six months, after the counter-notice	ss.48(1), 48(2)
Application where no counter-notice is given	Six months from the date it was due	s.49(3)
Court application where terms are settled but no lease completed	Two months after the appropriate period ends	ss.48(3), 48(5)

These are hard stops. Miss the section 48 window and the claim falls away, with the 12 month bar before you can start again. The six month long stop catches people out.

How the Premium Is Calculated

Schedule 13 Part II sets the premium. Paragraph 2 makes it the total of three things: the diminution in value of the landlord’s interest in your flat, the landlord’s share of the marriage value, and any compensation payable. Everything is valued at the relevant date, which section 39(8) defines as the date the notice is given, so a claim is priced on that day’s unexpired term however long negotiation runs.

Diminution in the Landlord’s Interest

Paragraph 3 measures this as the value of the landlord’s interest before the grant less its value after. In practice it is the ground rent lost, capitalised, plus the value of getting the flat back, deferred a further 90 years. Both depend on rates that are matters of valuation evidence rather than statute, which is why valuers differ on the same flat.

Marriage Value and the 80 Year Threshold

Marriage value is the uplift created when the extended lease and the landlord’s interest are brought together: the two are worth more after than before. Paragraph 4 gives the landlord 50 per cent of it. Paragraph 4(2A) then provides that where at the relevant date the unexpired term exceeds 80 years, the marriage value is taken to be nil.

That is a cliff edge, not a taper. A lease with 80 years and one month left on the day of the notice carries no marriage value; the same lease two months later does, and the landlord’s half share is added on top. Near 80 years, the date you serve matters more than any negotiating tactic.

Compensation

Paragraph 5 allows compensation where the grant causes the landlord loss or damage, including a fall in the value of other property held and any loss of development value. In an ordinary block it is usually nil.

What moves the premium
Driver	Effect
Unexpired term at the relevant date	Shorter term, higher premium. At 80 years or less, half the marriage value is added
Value of the flat	Feeds the reversion and the marriage value
Ground rent and review clause	A rising or reviewable rent makes the income stream more valuable
Deferment rate	Discounts the reversion. A lower rate means a higher premium
Capitalisation rate	Applied to the rent stream. A lower rate means a higher premium
Development value	Adds compensation under paragraph 5, on evidence of real loss

What the 2024 Act Changes, and What Is in Force

The 2024 Act rewrites both the length of the extension and the valuation, and almost none of it has been switched on. Three commencement instruments have been made, the most recent commencing right to manage and related tribunal provisions on 3 March 2025. Nothing has been commenced for valuation.

In force: section 27, removing the two year qualifying period, from 31 January 2025.
Not in force: section 33, substituting 990 years for the 90 years in section 56(1).
Not in force: section 37 and Schedule 4, the standard valuation method. Paragraph 17(3) requires an assumption that the parties are not seeking to acquire or dispose of the interests in question, so no marriage or hope value is payable.
Not in force: the Schedule 4 rate machinery, under which the deferment and capitalisation rates are prescribed by the Secretary of State and reviewed at least every ten years.
Not in force: Schedule 4 paragraph 26, a notional rent of 0.1 per cent of market value where the actual rent is higher.
Not in force: section 39, replacing the section 60 costs rules so the tenant is generally not liable for the other side’s costs.

So for pricing purposes the position in August 2026 is the pre-Act position: marriage value below 80 years, a 90 year extension, and the landlord’s reasonable costs. We keep a running note on which parts of the 2024 Act are in force, because that changes with each instrument.

That leaves a real decision: claim now, or wait. No commencement date has been set, so waiting is a bet on an unpublished timetable, and it is not free: the premium rises as the term shortens and steps up once the unexpired term drops to 80 years. At 100 years left, waiting costs little. At 82, it is a gamble.

Extending and buying the freehold are different claims with different tests: our comparison of right to manage, resident management companies and buying the freehold sets out where each leads.

Costs and Realistic Timescales

Section 60 makes you liable for the landlord’s reasonable costs of three things only: investigating your right, valuing the flat to fix the premium under Schedule 13, and granting the new lease. Section 60(5) means you are not liable for the landlord’s tribunal costs, so a schedule covering negotiation or tribunal work falls outside it.

You also pay your own solicitor and valuer, the premium, Land Registry fees, and stamp duty land tax if the premium reaches the threshold. Tribunal fees under the 1993 Act are £114 to issue and £227 when a hearing is listed, under Schedule 1 to the First-tier Tribunal (Property Chamber) Fees Order 2013.

Timescales follow the statute, not anyone’s service standard. The counter-notice alone takes at least two months, and tribunal proceedings cannot start until two months after that, so even a claim that settles promptly runs to months. Deal with the extension before you market the flat, and if a claim is under way the buyer’s solicitor will want the notice, the counter-notice and the deed of assignment alongside the usual LPE1 and management pack.

What to Do Next

Find the term date in your lease and count the years left. If the answer is between 80 and 90 years, get a valuation now, because the threshold is fixed by the date of the notice. Then instruct a solicitor who does enfranchisement work regularly and a valuer who will act on the claim.

If you are an RMC director, the company is often a third party to the lease and will be served with the section 42 notice. Plymouth Block Management acts for blocks across Devon, Cornwall and the wider South West and can set out where the company’s obligations start and stop. Speak to our leasehold advisor or get in touch. We do not value or negotiate extensions; take your own advice on the premium.

Common Questions

The questions leaseholders ask most often.

How Much Does a Lease Extension Cost?

There is no standard figure. The premium is built from the ground rent the landlord loses, the deferred value of the reversion, and, where the unexpired term is 80 years or less, half the marriage value. A flat with 95 years left and a nominal rent sits at the cheap end; the same flat at 70 years with a doubling rent sits at the expensive end. Add your own solicitor and valuer, the landlord’s section 60 costs and Land Registry fees.

Should I Wait for 990 Year Extensions and the End of Marriage Value?

Section 33 of the 2024 Act, which substitutes 990 years, and Schedule 4, which removes marriage and hope value, are not in force and no commencement date has been announced. Meanwhile the premium rises as the term shortens and steps up once the unexpired term reaches 80 years. Waiting is cheap with 100 years left and expensive with 82.

What Happens If the Landlord Ignores My Section 42 Notice?

Section 49 lets you apply to the court for an order determining the terms of acquisition in line with the proposals in your own notice, within six months of the date the counter-notice was due. That is a strong position, but it depends on your notice being valid, which includes having proposed a realistic premium.

Can the Landlord Refuse to Extend?

Only narrowly. The landlord can deny that you qualify, in which case the argument is about sections 5 and 7. Or the landlord can apply under section 47 on redevelopment grounds, which needs the lease to be due to terminate within five years of the relevant date, a genuine intention to demolish or substantially reconstruct, and a need for possession of your flat. Neither applies to most claims.

Does the Extension Get Rid of My Ground Rent?

Under the statutory route, yes. Section 56(1) requires the new lease to be at a peppercorn rent, so the ground rent and any review clause go for the whole of the new term. Under an informal extension it depends on what you agree, and freeholders often propose keeping a rent or introducing a new review pattern.

Sources

Everything above is taken from these, not from a summary of them:

Leasehold Reform, Housing and Urban Development Act 1993, section 42 legislation.gov.uk
Leasehold Reform, Housing and Urban Development Act 1993, section 56 legislation.gov.uk
Leasehold Reform, Housing and Urban Development Act 1993, Schedule 13 legislation.gov.uk
Leasehold Reform, Housing and Urban Development Act 1993, section 48 legislation.gov.uk
Leasehold Reform, Housing and Urban Development Act 1993, section 60 legislation.gov.uk
Leasehold and Freehold Reform Act 2024, section 27 legislation.gov.uk
The Leasehold and Freehold Reform Act 2024 (Commencement No. 2 and Transitional Provision) Regulations 2025 legislation.gov.uk
Leasehold and Freehold Reform Act 2024, Schedule 4 legislation.gov.uk
First-tier Tribunal (Property Chamber) Fees Order 2013, Schedule 1 legislation.gov.uk
Leasehold Reform, Housing and Urban Development Act 1993, section 5 legislation.gov.uk
Leasehold Reform, Housing and Urban Development Act 1993, section 7 legislation.gov.uk
Leasehold Reform, Housing and Urban Development Act 1993, section 39 legislation.gov.uk
Leasehold Reform, Housing and Urban Development Act 1993, section 45 legislation.gov.uk
Leasehold Reform, Housing and Urban Development Act 1993, section 47 legislation.gov.uk
Leasehold Reform, Housing and Urban Development Act 1993, section 49 legislation.gov.uk
Leasehold Reform, Housing and Urban Development Act 1993, section 53 legislation.gov.uk
Leasehold Reform, Housing and Urban Development Act 1993, section 57 legislation.gov.uk
The Leasehold Reform (Collective Enfranchisement and Lease Renewal) Regulations 1993, Schedule 2 legislation.gov.uk
Leasehold and Freehold Reform Act 2024, section 33 legislation.gov.uk
Leasehold and Freehold Reform Act 2024, section 37 legislation.gov.uk
Leasehold and Freehold Reform Act 2024, section 39 legislation.gov.uk
The Leasehold and Freehold Reform Act 2024 (Commencement No. 3) Regulations 2025 legislation.gov.uk
The Court and Tribunal Fees (Miscellaneous Amendments) Order 2026, Schedule 6 legislation.gov.uk

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