Lease Extension: Your Statutory Right and the New 2024 Rules

A flat lease is a wasting asset. Each year the lease shortens, the value of the flat falls, and the cost of extending rises. Most modern leases start at 99, 125 or 999 years, but the lease in your hand may have already lost decades to previous owners. Two threshold years matter most: 80 years (below this, marriage value applies and the premium rises sharply, although the 2024 Act will abolish marriage value once commenced) and 70 years (below this, most high-street mortgage lenders will not lend on the property at all, making it nearly unsaleable except to cash buyers).

Check your lease length today. The lease term is at the front of the lease. Subtract the years that have passed since the lease was granted. If you bought the flat second-hand, the lease term continues from the original grant date — it does not reset.

The Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993) gives most flat leaseholders the statutory right to extend their lease by 90 years (becoming 990 years under the Leasehold and Freehold Reform Act 2024 once relevant sections commence). Under the current rules, you must have owned the flat for at least 2 years before serving the Section 42 Notice — the 2024 Act will remove this 2-year requirement.

Eligibility: you must own a "long lease" (originally granted for more than 21 years) on a flat (not a house — houses use the Leasehold Reform Act 1967 instead). Some leasehold tenures (e.g. ex-Right-to-Buy tenants, business leases) have specific carve-outs but the vast majority of residential flat leaseholders qualify.

The new lease replaces your existing one with a 90-year extension on top of the current unexpired term. Ground rent reduces to "peppercorn" — effectively nil. Other lease terms are usually preserved.

The formal process under LRHUDA 1993:

1. Get a valuation from a chartered surveyor experienced in leasehold extension. The valuation estimates the premium you will pay. Cost: £600-£1,500.
2. Serve the Section 42 Notice on the freeholder, claiming your statutory right and offering your premium figure. The notice must be in prescribed form — get it drafted by a leasehold-specialist solicitor (cost: £600-£1,200 for the notice).
3. Freeholder's counter-notice within 2 months — accepting your right (usually), accepting your premium (rarely), or counter-offering a higher premium.
4. Negotiation period of up to 6 months from the counter-notice.
5. First-tier Tribunal (Property Chamber) application within 2 months of the end of the negotiation period if you cannot agree.
6. Tribunal decision usually within 6-9 months. Premium fixed by Tribunal is binding on both parties.
7. Completion — new lease executed, freeholder paid, Land Registry updated.

Total timeline: 6-18 months from notice to completion. Total cost: premium + legal fees (yours and freeholder's reasonable costs) + Land Registry fee. The new Act will cap freeholder's recoverable costs.

The premium is the amount you pay the freeholder for the lease extension. It is calculated from four main components:

• Diminution in value of the freeholder's interest — the loss of future ground rent and reversion (the right to get the property back when the lease ends).
• Capitalised ground rent — the present value of all future ground rent payments under the existing lease, discounted to today.
• Reversion value — the value of the freeholder's right to the property at the end of the lease, discounted to today.
• Marriage value (only if the unexpired lease is under 80 years) — the increase in total value when the freehold and leasehold interests are "married" by the extension, half of which is paid to the freeholder. The Leasehold and Freehold Reform Act 2024 abolishes marriage value for all extensions, but the abolition has not yet been commenced.

Premiums vary widely. For a London flat with 79 years remaining and a £200/year ground rent, the premium might be £20,000-£35,000. For a Manchester flat with 90 years remaining and £150/year ground rent, the premium might be £6,000-£12,000. Below 60 years, premiums for London flats can run into six figures. Use the Leasehold Advisory Service (lease-advice.org) free calculator for a rough estimate, then commission a formal valuation.

Many freeholders offer "informal" lease extensions — a private deal outside the statutory framework. The advantages: faster, cheaper legal fees, and sometimes a longer extension. The disadvantages: the freeholder can insist on retaining ground rent (sometimes increasing), can require waiver of statutory rights, and can include terms that prejudice future sale. Most leaseholders should use the statutory route unless the informal offer is clearly better than the statutory premium would be.

Red flags in informal offers: increasing ground rents (especially doubling clauses), shorter extensions (less than 90 years), retention of fees and consents, and lock-in periods. Any of these can make the flat harder to sell. If in doubt, serve a Section 42 Notice — it preserves your rights and starts the statutory clock. You can still accept an informal offer later if one is made.

The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024. Most substantive changes commence through regulations expected during 2025-2026. The key changes:

• No 2-year ownership requirement — anyone with a long lease can extend immediately on purchase.
• 990-year extension replaces the current 90-year extension.
• Marriage value abolished — premiums for short leases will fall sharply.
• Capped recoverable costs — freeholder's legal costs that can be charged to leaseholders capped at a fixed level.
• Standardised rates and online calculator — Department for Levelling Up to publish standardised capitalisation and deferment rates, replacing the variable Tribunal-decided rates.
• Ground rent reduction — separate consultation on capping all existing ground rents (the most significant change still being decided as at May 2026).

If you do not need to extend urgently, watching the commencement schedule may save you significant money. If you are below 80 years or planning to sell, getting on with the current statutory route may be better than waiting.

Five recurrent problems in lease extensions:

• Missing freeholder — if you cannot trace the freeholder (common in older blocks where ownership has changed multiple times), apply to the County Court for a vesting order under section 50 LRHUDA 1993.
• Disputed valuation — appoint a chartered surveyor experienced in lease extension; the freeholder's surveyor will be too, and the Tribunal will weigh both.
• Inflated freeholder costs — the freeholder can claim reasonable legal and valuation costs from you under section 60 LRHUDA. Watch for padded fees; the Tribunal can rule on what is reasonable.
• Selling during the process — the right transfers to a buyer if the Section 42 Notice has been served and assigned. Plan to either complete before selling or formally assign the right.
• Lease deemed unprotected — some short leases (under 21 years) and some commercial leases are not eligible. Check eligibility before paying for a valuation.