If you’re buying a flat or apartment, it may well be leasehold, which means you own the right to occupy the property for a set period rather than owning the freehold itself.
Picture an empty box. As a freeholder, you own the whole box, outside and in. As a leaseholder, you effectively own the right to occupy the inside for the term set out in your lease.
Leases shorten with time. As the remaining term gets shorter, the value of the lease can fall and it may become more difficult to sell or remortgage the property. This is why many leaseholders decide to extend.
A lease extension valuation estimates the premium you may need to pay the landlord for the new lease. If your lease is approaching 80 years, getting professional advice is particularly important because, under the current rules, marriage value can become payable when a lease has 80 years or fewer remaining.
Here’s what you need to know.
Contact UsInformal and formal valuations
There are two main approaches to extending a lease: informal negotiation with the landlord and the formal statutory lease extension process.
With an informal extension, the leaseholder and landlord negotiate the length of the new lease, the premium, ground rent and other terms. A very long extension may be agreed, but the terms depend on the individual negotiation.
For qualifying flats, the current formal statutory route gives the leaseholder an additional 90 years and reduces the ground rent to a peppercorn, effectively zero. The premium is calculated according to the Leasehold Reform, Housing and Urban Development Act 1993.
One important change has already taken effect. Since 31 January 2025, leaseholders no longer have to own the property for two years before starting a statutory lease extension claim. A qualifying leaseholder can begin the process once they become the registered owner
What is changing with the lease extension process?
The Leasehold and Freehold Reform Act 2024 contains major changes to lease extensions, but most of the headline reforms are not yet in force.
The government intends to increase statutory lease extensions to 990 years at a peppercorn ground rent, remove marriage value, introduce a more standardised valuation method and, in most cases, require each party to meet its own non-litigation legal and valuation costs.
As at September 2026, these changes have not yet taken effect. The government is consulting on the valuation rates and process-cost rules and has said that some issues in the 2024 Act must first be corrected through the forthcoming Commonhold and Leasehold Reform Bill before the new enfranchisement provisions can be commenced.
For anyone considering an extension now, advice should therefore be based on the current statutory rules unless and until the new provisions come into force
I’ve heard about lease extension valuation software – is it any good?
Online tools can be useful for getting a rough indication of what you might have to pay. They should not, however, be treated as a replacement for a professional lease extension valuation.
A proper valuation needs to consider the remaining lease term, ground rent, the current market value of the flat, its value following an extension and, where relevant, marriage value. A valuer will also apply professional judgement to matters such as relativity, capitalisation and deferment rates.
These details can make a significant difference to the figure.
A lease extension surveyor can provide a realistic valuation range, advise on the opening offer and negotiate with the landlord’s valuer. If the two sides cannot agree, the valuation may ultimately need to be determined by the First-tier Tribunal in England.
An online calculator can be useful for initial planning, but it is not a substitute for professional valuation evidence.
The facts you need to calculate an accurate lease extension premium
A professional valuation will usually take several factors into account:
- The value of the property – including its existing value and the value it would have following the lease extension.
- The current lease length – shorter leases can have a significant effect on the premium.
- Ground rent – including the amount payable and how it changes over the remainder of the lease.
- Marriage value – under the current rules, this can apply where the lease has 80 years or fewer remaining.
- The term and reversion – representing the landlord’s loss of ground rent and the delay before the property would otherwise revert to them.
- Relativity and valuation rates – specialist assumptions used when assessing shorter leases.
Under the current statutory system, the premium compensates the landlord for the loss of ground rent, the delayed reversion and, where applicable, half of the marriage value created by extending a lease with 80 years or fewer remaining.
It is a specialist calculation, and relatively small changes in the assumptions used can have a noticeable effect on the final figure.
Help with lease extension valuation
If you are considering a lease extension, obtaining professional lease extension valuation advice at an early stage can help establish the likely premium and provide a sound basis for negotiations.
An experienced Chartered Surveyor can explain the figures, provide practical advice and work alongside your solicitor throughout the process.
Speak to our team if you would like independent advice about your lease and the next steps.
