A Guide For Landlords – What Is A Lease Extension?

A lease extension is the process by which the term remaining on a leasehold property is lengthened, usually in return for a payment known as a premium. For landlords and freeholders, it is not simply an administrative request to be processed. It is a transaction that transfers value, and the amount at stake is frequently substantial.

The remaining term on a lease drives its value. As the unexpired term shortens, the leaseholder’s interest falls in value and the freeholder’s reversionary interest rises. Short leases also become harder to mortgage and harder to sell, which is why leaseholders act. For landlords in the capital, where property values are high and lease structures are often complex, a lease extension London transaction can involve sums that make professional advice a necessity rather than a refinement. Obtaining a RICS lease extension London valuation before responding to any proposal is the single most useful step a freeholder can take.

This guide explains what a lease extension is, how the process works, how the premium is assessed, and what landlords should check before agreeing to anything.

What Is a Lease Extension?

A lease extension adds years to the term of an existing leasehold interest. In most cases it is achieved not by amending the original document but by surrendering the existing lease and granting a new one on revised terms — which is why the paperwork matters as much as the price.

The two parties are the landlord (or freeholder), who owns the reversionary interest, and the leaseholder (or tenant), who owns the lease. The leaseholder pays a premium; the landlord gives up a period of future possession and, usually, future ground rent income.

Lease terms matter because they are finite. A lease with 150 years remaining behaves, commercially, much like a freehold. A lease with 70 years remaining behaves very differently: lenders become cautious, buyers negotiate harder, and the gap between the two interests widens.

There are two routes. A statutory lease extension follows a procedure set out in legislation and gives a qualifying leaseholder an enforceable right. A voluntary or informal lease extension is negotiated freely between the parties, with no statutory framework governing what is agreed.

Why Would a Landlord Need to Deal With a Lease Extension?

Most landlords encounter the issue because a leaseholder raises it, often when preparing to sell or remortgage. Others deal with it proactively, as part of managing a portfolio.

Either way, the landlord’s interests are financial and legal:

• Protecting value. The premium represents compensation for the value the freeholder is giving up. Agreeing too low a figure is a permanent loss.
• Ground rent. Extending usually extinguishes future ground rent income. That income stream has a capital value which must be reflected in the premium.
• Reversionary value. The right to possession at the end of the term has a present value, calculated by deferring the future value of the property back to today.
• Responding correctly. Where a leaseholder makes a formal statutory claim, the landlord’s response is governed by strict procedure and timescales. A mishandled or missed response can be costly.

The practical point is that a leaseholder’s proposal is a negotiating position, not a valuation. Treating it as the latter is how landlords lose money.

How Does a Lease Extension Work in London?

The precise procedure depends on whether the claim is statutory or negotiated. The commercial sequence, however, is broadly consistent:

1. Review the existing lease — term, ground rent, covenants and any unusual provisions.
2. Establish the unexpired term — measured precisely, from the term commencement date rather than the date of the lease.
3. Check ground rent and review clauses — escalating or doubling rents materially affect the premium.
4. Obtain professional valuation advice — before responding to any figure.
5. Consider the leaseholder’s proposal — against your own valuation, not in isolation.
6. Negotiate — usually surveyor to surveyor.
7. Instruct solicitors — to deal with notices, terms and the new lease.
8. Complete the transaction.
9. Register the new lease at HM Land Registry where required.

In London, step four carries disproportionate weight. Values vary sharply between boroughs, and sometimes between streets, so comparable evidence has to be genuinely local to be persuasive.

What Is a Statutory Lease Extension?

A statutory lease extension is one made under a leaseholder’s legal right, following a prescribed procedure.

For flats, the framework is the Leasehold Reform, Housing and Urban Development Act 1993. Under the current regime, a qualifying leaseholder of a flat held on a long lease can require the landlord to grant a new lease of 90 additional years at a peppercorn ground rent, on payment of a premium.

The mechanics run broadly as follows:

• The leaseholder serves a formal notice under Section 42 setting out their proposed premium.
• The landlord serves a counter-notice within the period specified, either admitting or disputing the claim and stating a counter-proposal.
• The parties negotiate, usually through valuers.
• If terms cannot be agreed, either party may apply to the First-tier Tribunal (Property Chamber) to determine the premium and terms.

For houses, a separate regime applies under the Leasehold Reform Act 1967, with different qualifying tests and a different extension term.

One qualifying requirement has already changed. The two-year ownership rule, which previously required a leaseholder to have owned the property for two years before claiming, was removed with effect from 31 January 2025. A leaseholder must still be the registered owner to bring a claim.

Other eligibility and valuation rules are subject to further reform, discussed below. Landlords should not assume the current framework is permanent, nor that announced changes are already operative.

What Is a Voluntary or Informal Lease Extension?

A voluntary lease extension is agreed directly between landlord and leaseholder outside the statutory route. Nothing compels either party to proceed, and the terms are whatever the parties agree.

The attraction for landlords is flexibility: the process can be quicker, cheaper in professional fees, and can allow other lease defects to be tidied up at the same time. The risks are real, though:

• Without a statutory framework, there is no tribunal to determine a fair premium if talks break down.
• Lease terms can be altered, sometimes to the leaseholder’s disadvantage, which can create problems on a later sale.
• Ground rent treatment on a new lease is subject to statutory restriction, and getting this wrong can have consequences for both parties.
• A leaseholder who is unhappy with informal terms may simply serve a statutory notice instead.

Both parties should take independent valuation and legal advice. An informal deal that looks efficient can prove expensive if the resulting lease is difficult to mortgage.

Statutory vs Informal Lease Extension

How Is a Lease Extension Premium Calculated?

The premium compensates the landlord for the reduction in value of their interest. Under the current statutory regime for flats, it is built from several components:

• Loss of ground rent — the future income stream, capitalised to a present value.
• The reversion — the value of the right to possession at term end, deferred back to today.
• Marriage value — where applicable under the current rules, discussed below.
• Compensation — for any other losses to the landlord’s interest where the legislation provides for it.

Each component depends on assumptions: the property’s value, capitalisation and deferment rates, and the unexpired term. Small differences in those inputs produce large differences in the answer, which is why two competent valuers can reach different figures and why negotiation exists at all.

This is also why a lease extension calculator is a poor substitute for advice. Online tools cannot assess a specific lease, weigh local comparable evidence, or take a defensible position on rates. They produce a number; a professional lease extension valuation produces a reasoned opinion that can be argued and, if necessary, defended before a tribunal.

Why Does the 80-Year Lease Threshold Matter?

Under the current framework, once the unexpired term falls below 80 years, marriage value enters the calculation.

Marriage value is the additional value released when the freehold and leasehold interests are combined — broadly, the uplift created by the extension itself. Where the lease has under 80 years remaining, the legislation requires that uplift to be shared, with half payable to the landlord as part of the premium. The effect is that premiums rise noticeably as a lease crosses the 80-year line.

The Leasehold and Freehold Reform Act 2024 provides for the abolition of marriage value. That provision is not in force. No commencement order has been made, and a claim served today is still valued under the existing rules, marriage value included.

This distinction matters commercially. A good deal of published commentary states that marriage value has been abolished. As at September 2026, it has not been, and landlords should treat any adviser who says otherwise with caution.

What Is a RICS Lease Extension Valuation?

RICS is the Royal Institution of Chartered Surveyors, the professional body that sets standards for valuation practice in the UK. A valuation carried out by a RICS Registered Valuer is prepared to those standards, which is what gives it weight in negotiation and before a tribunal.

A RICS lease extension London valuation typically involves:

• Establishing the market value of the flat, both in its current state and with an extended lease.
• Analysing local comparable evidence — essential in London, where values differ significantly over short distances.
• Assessing the ground rent and its capitalised value.
• Valuing the reversion using appropriate deferment rates.
• Calculating marriage value where the current rules require it.
• Setting out the reasoning in a report that can be tested.
• Supporting negotiation with the other side’s valuer.

One caveat worth stating plainly: RICS membership alone does not make someone a lease extension specialist. Enfranchisement valuation is a distinct discipline. Ask about relevant experience, tribunal work and familiarity with the specific London market in question.

How Much Does a Lease Extension Cost in London?

There is no standard price, and any figure quoted without sight of the lease should be treated sceptically.

The total cost typically comprises:

• The premium — much the largest element, and entirely property-specific.
• Valuation fees for each party.
• Legal fees for each party.
• The landlord’s reasonable professional costs, which the leaseholder is generally required to pay in a statutory claim.
• Land Registry fees on registration of the new lease.
• Tribunal costs if the matter is not settled by agreement.
• Stamp Duty Land Tax, where the premium exceeds the relevant threshold.

London premiums vary enormously because London values do. The same lease length on the same flat type will produce very different figures in different boroughs. That variance is precisely why comparable evidence, rather than a rule of thumb, drives the answer.

What Factors Affect the Cost of a Lease Extension?

• Market value of the property
• Unexpired lease term
• Level of ground rent
• Ground rent review and escalation provisions
• Location and local market conditions
• Property type and condition
• Availability and quality of comparable sales evidence
• Value of the freeholder’s reversionary interest
• Specific terms and defects in the existing lease
• Whether the route is statutory or voluntary
• The legal framework applicable at the date of the claim

What Should Landlords Check Before Agreeing to a Lease Extension?

• Read the original lease in full, including schedules.
• Confirm the unexpired term precisely.
• Check the ground rent and how it is reviewed.
• Identify any escalation or doubling provisions.
• Review restrictions, covenants and any unusual clauses.
• Establish current market value with local evidence.
• Obtain an independent leasehold valuation before responding.
• Assess the leaseholder’s proposal against that valuation.
• Take legal advice on notices, procedure and the draft lease.
• Model the financial effect on the wider portfolio.
• Confirm which legal framework applies at the date of the claim.

Can a Landlord Refuse a Lease Extension?

The answer depends on the route.

Where a leaseholder qualifies and follows the statutory procedure correctly, the landlord generally cannot refuse. The right is a statutory one, and disputes over the premium or terms are resolved by the tribunal rather than by refusal. There are limited exceptions and technical defences, but they are narrow and fact-specific.

Where the request is voluntary, the landlord is under no obligation to agree at all, and is free to negotiate or decline.

The practical risk is misjudging which situation you are in. A landlord who refuses what turns out to be a valid statutory claim, or who mishandles a counter-notice, can face consequences including adverse costs. Specialist legal advice on the specific facts is essential.

Common Mistakes Landlords Make With Lease Extensions

• Delaying. Time changes the numbers, and not always favourably.
• Relying on online calculators rather than a professional valuation.
• Instructing a valuer without enfranchisement experience.
• Not reading the lease properly — the ground rent provisions in particular.
• Focusing solely on the premium while ignoring the terms of the new lease.
• Overlooking ground rent value in the calculation.
• Agreeing terms before taking legal advice.
• Assuming every claim follows the same route. Flats and houses are governed by different statutes.
• Acting on reform headlines rather than on what is actually in force.

Why Use a RICS Valuer for a Lease Extension in London?

An experienced RICS valuer brings valuation expertise, current knowledge of the relevant London submarket, access to comparable evidence, and a working understanding of leasehold valuation principles as they are applied in practice.

Just as importantly, the advice is independent. A report prepared to RICS standards sets out its assumptions and reasoning, which means it can be examined, argued and — if the matter reaches the tribunal — defended.

What it does not do is guarantee an outcome. No valuation guarantees the highest or lowest premium. What it provides is a properly evidenced position from which to negotiate, and a realistic view of what a reasonable settlement looks like.

Lease Extension London: When Should Landlords Get Professional Advice?

• The lease is approaching or has passed 80 years unexpired.
• A leaseholder has served a formal notice.
• There is a disagreement about the premium.
• The ground rent provisions are complex or escalating.
• The property is high-value, which describes much of the London market.
• The lease contains unusual clauses or defects.
• An informal extension has been proposed.
• Tribunal proceedings are a realistic possibility.
• You are uncertain how pending reform affects the transaction.

Leasehold Reform in 2026 – What Landlords Need to Know

This is the area where landlords are most likely to be misled, so precision matters.

The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024. Most of its provisions are not yet in force. Bringing them into effect requires commencement regulations, and in several cases further secondary legislation.

What has commenced:

• Removal of the two-year ownership requirement for lease extension and freehold claims, from 31 January 2025.
• Right to manage reforms, including revised qualifying criteria, from 3 March 2025.

What has not commenced:

• Abolition of marriage value.
• The 990-year standard extension term with peppercorn ground rent.
• The prescribed deferment and capitalisation rates underpinning the new valuation method.

The Government has been consulting on the valuation rates, with that consultation closing on 23 September 2026. The rates will then require secondary legislation. Separately, the Government has acknowledged technical flaws in the 2024 Act which it intends to correct through the forthcoming Commonhold and Leasehold Reform Bill, announced in the 2026 King’s Speech. A draft was published on 27 January 2026 and underwent pre-legislative scrutiny, with the select committee reporting on 27 May 2026.

There is also live litigation. A group of freeholders challenged the reforms by judicial review; the High Court dismissed the claim on 24 October 2025, and the Court of Appeal has granted five groups of freeholders permission to appeal.

The Bill would additionally cap ground rents on existing leases at £250 a year, falling to a peppercorn after 40 years, though that cap is not expected to take effect before late 2028 and remains subject to Parliament.

The practical position for landlords: a lease extension claim served today is valued under the existing rules. Marriage value still applies below 80 years. Before relying on any reform, verify on legislation.gov.uk or GOV.UK whether the relevant provision has actually been commenced.

Frequently Asked Questions About Lease Extensions

What is a lease extension?
It is the process of adding years to the term of a leasehold property, usually in exchange for a premium paid to the landlord. In most cases the existing lease is surrendered and a new one granted on revised terms, rather than the original document simply being amended.

How much does a lease extension cost in London?
There is no standard figure. The premium depends on the property’s value, the unexpired term, the ground rent and the applicable valuation assumptions, alongside legal fees, valuation fees, the landlord’s reasonable costs, Land Registry fees and potentially Stamp Duty Land Tax.

How long does a lease extension take?
A statutory claim commonly takes several months, driven by the notice periods, valuation negotiation and conveyancing. Where terms cannot be agreed and the matter goes to the tribunal, it takes longer. Voluntary extensions can move faster, but there is no fixed timetable.

What happens when a lease has less than 80 years remaining?
Under the current rules, marriage value enters the premium calculation, and half of it is payable to the landlord. Premiums therefore increase once a lease falls below 80 years. The 2024 Act provides for abolishing marriage value, but that provision is not yet in force.

What is a RICS lease extension valuation?
A valuation prepared to Royal Institution of Chartered Surveyors standards, assessing market value, ground rent, the reversion and — where the current rules require it — marriage value. It sets out reasoning and evidence, which is what allows it to support negotiation or tribunal proceedings.

Can a landlord refuse a lease extension?
Not usually, where the leaseholder qualifies and follows the statutory procedure correctly. Disputes about the premium are determined by the tribunal rather than resolved by refusal. A voluntary request, by contrast, can be declined. Legal advice on the specific facts is essential.

Does a lease extension remove ground rent?
A statutory extension of a flat reduces the ground rent to a peppercorn for the new term. Under a voluntary extension, ground rent treatment is a matter for negotiation, subject to the statutory restrictions that apply to newly granted leases. Take legal advice before agreeing anything.

Is a statutory or informal lease extension better?
Neither is universally better. Statutory claims offer certainty, a defined procedure and a tribunal backstop. Informal deals offer flexibility and can be quicker, but carry no fallback if negotiations fail and can produce lease terms that cause difficulties on a later sale.

Do I need a surveyor for a lease extension?
For any transaction of consequence, yes. A valuer with enfranchisement experience establishes what the interests are actually worth. Without one, a landlord is negotiating against a figure produced by the other side’s adviser with nothing evidenced to test it against.

What is changing under the Leasehold and Freehold Reform Act 2024?
The Act provides for abolishing marriage value, a 990-year standard extension term at a peppercorn rent, and prescribed valuation rates. Those provisions are not yet in force. The two-year ownership requirement was removed in January 2025 and right to manage reforms commenced in March 2025.

Conclusion

A lease extension transfers value from one party to another, and for landlords the amount involved is rarely trivial. Understanding the lease, establishing the unexpired term accurately, and assessing the ground rent and reversion properly are the foundations of any sensible decision.

Valuation and legal advice are distinct, and both matter. A valuer establishes what the interests are worth; a solicitor deals with notices, procedure and the terms of the new lease. Neither substitutes for the other.

The reform position adds a further layer. Announced changes and operative law are not the same thing, and at present much of the Leasehold and Freehold Reform Act 2024 remains uncommenced. Landlords should check the current position before relying on it.

For freeholders dealing with a lease extension London enquiry — particularly where the unexpired term is short, the ground rent is complex or the property is high-value — obtaining an independent RICS lease extension London valuation before responding is a sensible first step. It costs a fraction of the sums typically in dispute, and it turns a negotiation into an informed one.

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