Why does a lease under 80 years cost more to extend?
A lease is a wasting asset. Every year that passes shortens the term you own, and the market prices that shortening slowly at first and then, past a certain point, very quickly. The point is 80 years.
Under the Leasehold Reform, Housing and Urban Development Act 1993, the premium a leaseholder pays for a statutory extension is made up of the freeholder's lost ground rent, the freeholder's lost reversion, and, where the unexpired term is below 80 years at the valuation date, marriage value. That is Schedule 13 to the Act, whose paragraph 4(2A) takes marriage value as nil above eighty years and which is still in force unamended, because the valuation provisions of the Leasehold and Freehold Reform Act 2024 have not been commenced. Checked 20 September 2026. Marriage value is the increase in the value of the flat produced by the extension itself. The Act gives the freeholder half of it.
That is why the jump is so abrupt. At 80 years and one day, marriage value is zero. At 79 years and 364 days it is half of the difference between the flat with a short lease and the flat with a long one, and that difference can be a large fraction of the flat's value. Nothing about the building has changed; the valuation formula has. And once crossed, the line does not reverse: the premium keeps rising as each year of the term falls away, and the pool of lenders willing to lend on the flat shrinks with it.
The instinct to wait for the Leasehold and Freehold Reform Act 2024 is understandable, because the Act provides for marriage value to be removed from the calculation altogether, along with a new standard valuation method. But the valuation provisions only apply once brought into force by regulations, and there is no date (not yet in force as at 19 September 2026; no commencement date announced). Until then the 1993 Act formula applies and the 80-year line is as sharp as it has always been. Every year of waiting costs a year of term, and a lease that crosses 70 years while you wait loses lenders as well.
What happens at each stage of a lease's life?
The table below is a rule of thumb for flats in England and Wales. The exact figures depend on the flat, the ground rent and the lender, but the pattern holds.
| Years left | Extension premium | Lending | Sale |
|---|---|---|---|
| Over 125 | Low: ground rent and reversion only | No issue for any mainstream lender | No effect on price |
| 90 to 125 | Low, rising gently each year | No issue | Little or no effect |
| 80 to 90 | Still no marriage value, but the clock is loud | Generally fine | Buyers' conveyancers start to ask about extension |
| 70 to 80 | Marriage value applies: a sharp step up | Some lenders decline; each sets its own minimum | Price falls; buyers expect an extension or a discount |
| 60 to 70 | High and rising fast | Most mainstream lenders decline | Cash buyers and investors only |
| Under 60 | Very high; reversion value dominates | Effectively unmortgageable | Value tracks the extension cost closely |
What are your options?
There are five, and the right one depends on if you plan to stay or sell, whether the freeholder is known and cooperative, whether your neighbours want to act together, and how the flat is financed. The worst option is to do nothing and hope a buyer does not notice. They will, because their conveyancer reads the lease before anything else.
| Option | How it works | Timing | Who it suits |
|---|---|---|---|
| Statutory lease extension | Serve a section 42 notice under the Leasehold Reform, Housing and Urban Development Act 1993; 90 years added to the term and ground rent reduced to a peppercorn; the freeholder cannot refuse. Section 33 of the Leasehold and Freehold Reform Act 2024 would make it 990 years, and on 20 September 2026 it is still not in force | Several months from notice to completion; the valuation date is fixed by the notice | Owners staying put, or anyone whose freeholder is uncooperative or absent |
| Informal extension | Negotiate directly with the freeholder on whatever terms they will offer | Can be quicker if the freeholder is willing; no statutory timetable | Cooperative freeholders and share-of-freehold buildings; check the ground rent terms carefully |
| Collective enfranchisement | Qualifying leaseholders together buy the freehold of the building, then grant themselves long leases at no premium | Longer, and the initial notice must come from qualifying tenants of at least half the flats in the building, under section 13(2)(b)(ii) of the 1993 Act, checked 20 September 2026 | Buildings where enough neighbours face the same problem |
| Sell with notice served and assigned | Serve the section 42 notice, then assign its benefit to the buyer on completion so they complete the extension on your valuation date | Fits inside a normal sale timetable | Sellers who cannot or do not want to fund the premium |
| Sell at a discount | Market the flat as a short-lease flat and accept a price that reflects the extension cost | Immediate, but to a smaller pool of mainly cash buyers | Rarely the best outcome; the discount usually exceeds the premium |
How does a statutory extension work, step by step?
First, a valuation. A surveyor experienced in leasehold valuation advises on the premium and the figure to put in the notice, because the notice must state a proposed premium, under section 42(3)(c), and it has to be a figure you genuinely propose to pay. A low opening figure honestly meant is not fatal. A token or sham figure you have no intention of paying can invalidate the notice, and an invalid notice costs you the valuation date. Second, the notice. Your conveyancer checks you qualify, identifies the competent landlord and any intermediate landlords, drafts the section 42 notice and serves it. That date fixes the valuation date, under section 39(8) of the 1993 Act, checked 20 September 2026, which is why the notice goes in as early as possible. A notice served while the lease has 80 years and a month left locks the calculation on the no-marriage-value side of the line, however long the negotiation then takes.
Third, the counter-notice. The freeholder has until the date stated in your notice to admit or deny the claim and state their own premium. You set that date yourself, under section 42(3)(f), and section 42(5) requires it to be not less than two months after the date you give the notice. The obligation to answer by it is section 45(1). Checked 20 September 2026. Fourth, negotiation, usually between the two valuers. Fifth, if the premium is not agreed, an application to the First-tier Tribunal (Property Chamber) in England or the Leasehold Valuation Tribunal in Wales, which must be made within a window that opens two months after the counter-notice and closes six months after it, both periods running from the counter-notice date under sections 48(1) and 48(2), so a counter-notice on 1 March means the earliest application is 1 May and the last day is 31 August. Checked 20 September 2026. Sixth, the new lease is completed and registered at HM Land Registry, with your existing mortgage carried over onto it.
The informal route is a private negotiation with the freeholder, on whatever terms they will offer. It can be quicker and cheaper for a very short extension or where the freeholder is co-operative. But there is no right to it, the ground rent is often retained or increased, and the terms deserve careful reading. Our lease extension service runs either route and tells you at the outset which one fits.
The costs, by name: the premium itself; your valuer's fee; your own conveyancing fee; the freeholder's reasonable valuation and legal costs of dealing with the claim, which section 60 of the Act makes you liable for, though only the reasonable costs of investigating the right, valuing the flat and granting the lease, and not the freeholder's costs of tribunal proceedings, which section 60(5) excludes. Section 39 of the 2024 Act would repeal section 60 and is not in force. Checked 20 September 2026; the HM Land Registry fee for registering the new lease, set by the fee order; and, if the premium goes to the tribunal, the tribunal fee and your own representation. Stamp Duty Land Tax in England or Land Transaction Tax in Wales can apply to the premium, which is chargeable consideration under Schedule 4 to the Finance Act 2003. The residential nil rate thresholds are 125,000 pounds in England and 225,000 pounds in Wales, checked on the HMRC and Welsh Revenue Authority pages on 20 September 2026. Notification is a separate and lower test: on a lease of seven years or more a return is needed once the premium reaches 40,000 pounds, even where no tax is payable, so a premium between those figures still has to be reported.
Where does your lender stand?
Each lender sets its own minimum term, published in its part of the UK Finance Mortgage Lenders' Handbook. A common requirement is that the lease must have a set number of years left at the start of the mortgage, or a set number of years left after the mortgage ends. There is no general figure: the answers run from about twenty five years to ninety and they are not measured the same way, so the only reliable answer is the lender's own. It is published free, in that lender's part 2 of the Handbook at lendershandbook.ukfinance.org.uk, and your conveyancer reads it before exchange. Many lenders decline outright where fewer than about 70 years remain, and some set the bar higher. The effect on a sale is direct: if most lenders will not lend, most buyers cannot buy, and the ones who can are cash buyers who price the lease extension into their offer and then some.
If you have a mortgage now, the lender is a party to the extension whether you like it or not. A statutory extension is technically a surrender of the old lease and the grant of a new one, and the lender's charge has to attach to the new lease. Section 58(4) of the Act says the new lease takes effect subject to the mortgage in substitution for the old one, so the charge carries over and HM Land Registry registers the new lease subject to it. Many lenders still ask to be told and some require a deed of substituted security. Checked 20 September 2026. Your conveyancer checks the lender's requirements before completion.
If you need to borrow to pay the premium, most lenders will consider a further advance or a remortgage for that purpose, and some will lend on the flat as it will be after the extension, on condition that the extension completes on the same day as the new mortgage. Our remortgage service runs the two together where a lender agrees to that structure.
If you are buying a flat with fewer than 80 years, the lender's minimum term rule is the first question, and the buying a leasehold flat checks include reading the unexpired term off the lease before the mortgage application goes in, not after the valuation comes back. Where the lease is close to the lender's limit, the usual solution is for the seller to serve the section 42 notice before completion and assign it to you, so the extension follows immediately after you own the flat. A lease with 85 years left is mortgageable today, but you will need to extend within a few years, so price that into your offer.
What if you are selling rather than staying?
Three routes are in the options table. The first, extending before marketing, produces a long-lease flat that sells to the full market at the full price, and the premium is normally recovered in the sale. It takes the longest, and it means funding the premium up front.
The second, serving notice and assigning it, keeps the sale alive without you paying the premium. The notice is served, the sale proceeds, and the benefit of the notice goes to the buyer only if the transfer says so. Section 43(3) of the Act makes the benefit assignable with, but incapable of surviving apart from, the lease of the whole flat, and if the lease is assigned without the benefit of the notice the notice is deemed withdrawn at the date of the assignment. So a transfer that is silent about it does not carry the claim across, it kills it: the valuation date goes, no fresh notice can be served on that flat for twelve months, and the freeholder's costs to that point can still be billed. Done properly, with the benefit expressly assigned in the transfer, the buyer completes the extension on the valuation date your notice fixed. Checked 20 September 2026. The buyer pays the premium; the price reflects that. It works well with a mortgage buyer whose lender will accept a short lease on condition the extension follows.
The third, selling at a discount, is the simplest and usually the most expensive. A cash buyer prices in the premium, the freeholder's costs, the risk and the inconvenience, and then some. Our selling service can serve the notice as part of the sale.
When should you act, and how do you check the years left?
Now, on the statutory route, if you are keeping the flat and the freeholder is anything other than a share-of-freehold company you control. The valuation date is fixed by the notice, so serving it stops the premium rising while everything else is worked out. The former requirement to have owned the flat for two years before claiming was abolished with effect from 31 January 2025 (section 27 of the Leasehold and Freehold Reform Act 2024, in force 31 January 2025, checked 19 September 2026), so a recent purchase is no bar.
The one situation where waiting can make sense is where the flat is being sold within months to a buyer who will serve their own notice, or where the building is close to a collective purchase of the freehold that would make a separate extension unnecessary. In both cases the wait is short and has a fixed end. An open-ended wait for the 2024 Act to commence is not that; it is a wager on regulations with no published date, paid for in years of term.
To check where you stand, read the lease. It states the term and the date it started, and the two together give the expiry date. The title register for the leasehold title repeats the term in the property description. If you do not have the lease, an official copy can be had from HM Land Registry, and our lease copy service gets it for you. Count from today, not from the date you bought. A lease that had 92 years left when you bought it a decade ago has 82 left now, and the decision on extending is no longer one for some future year.