What is the cost of a lease extension and how can I finance it?

The Cost of a Lease Extension

Lease extensions for flats are currently governed (for the statutory route) by the Leasehold Reform, Housing and Urban Development Act 1993, which gives qualifying leaseholders the right to extend their lease by 90 years with the ground rent reduced to a peppercorn (often described in practice as £0). This means that once the extended lease is granted under the statutory process, no further monetary ground rent is payable to the freeholder for the extended term.

For a lease extension estimate, you may want to try our lease extension calculator. 

The Leasehold Reform (Ground Rent) Act 2022 separately restricts ground rent to a peppercorn for most new regulated long residential leases granted on or after 30 June 2022 (subject to statutory exceptions). Whether the 2022 Act affects a voluntary (informal) “lease extension” depends on how the transaction is structured— for example, whether it results in the grant of a new regulated lease (often via surrender and regrant) or is documented purely as a variation of the existing lease.

Currently there is no general statutory cap in force automatically reducing ground rent in existing long residential leases. From time to time, policy proposals and public statements have referred to potential reform of ground rent terms in existing leases, but the detail, timing and final scope of any future cap (if introduced) cannot be treated as settled law unless and until enacted and brought into force. Until then, existing leases remain governed by their contractual ground rent provisions unless varied or removed through another legal mechanism (for example, a deed of variation, or a statutory lease extension for flats).

Under the current statutory valuation regime for flats, if the lease has 80 years or less unexpired at the relevant valuation date, the premium for a statutory lease extension will generally include marriage value, being an additional element reflecting the increase in the property’s value attributable to the grant of the extended lease. This is one reason why extending a lease once it has reached (or fallen below) 80 years can be noticeably more expensive.

Looking ahead, the Leasehold and Freehold Reform Act 2024 contains provisions intended to make significant changes to leasehold reform, including widely reported changes to extension length and valuation (including abolition of marriage value). However, key provisions are subject to commencement and, in some areas, further regulations. As of early 2026, lease extensions continue to proceed under the existing 1993 Act framework unless and until the relevant 2024 Act provisions are brought into force.

Lease extensions are rarely cheap – especially if you have fewer than eighty years remaining on them. So how do you calculate the cost of a lease extension? This will depend on the means by which you are extending your lease. If you are taking the statutory route (by serving a Section 42 notice on your landlord), the premium will usually be determined by a formula set out in the Leasehold Reform Act. The main deciding factor will generally be how many years are left on your lease. If there are less than 80 years remaining, extending your lease will incur “marriage value” which will make the cost of extending your lease far more expensive. Under the Leasehold and Freehold Reform Act 2024, statutory lease extensions will provide leaseholders with a new 990-year term at a peppercorn (zero) ground rent, offering much longer security and simpler valuation. Previously, if there were less than 80 years remaining, extending your lease would incur ‘marriage value’. However, under the Leasehold and Freehold Reform Act 2024, marriage value may be abolished, meaning leaseholders will no longer pay this additional cost once the relevant provisions take effect.

Alternatively, if you are negotiating the cost of an informal lease extension with your landlord, there is no limit on how much (or how little) your landlord can charge for a lease extension. For this reason, it is a good idea to instruct a specialist lease extension surveyor to value your lease to use as a starting point for your negotiation, though there is no obligation to do so. If your landlord proves difficult to negotiate with, it may be best to take the statutory route.

If you would like an estimate for your lease extension, try our lease extension calculator.

Lease extension premium (the main cost)

In addition to professional fees, the largest single cost is the premium payable to the freeholder for the extension. Under the statutory route for flats, this premium compensates the freeholder for (a) the loss of future ground rent, (b) having to wait longer to regain the flat (the reversion is “pushed back” by 90 years), and (c) where the unexpired term is 80 years or less at the valuation date, a share of the “marriage value” (the extra value created by combining a longer term with the flat). A specialist enfranchisement valuer will assess the premium using market evidence and standard valuation inputs (for example, the flat’s open‑market value, the current ground rent and any review pattern, “relativity” between short and long leases, and accepted deferment/capitalisation rates). The valuer will usually provide a range; you then propose a figure in your section 42 notice, negotiate with the landlord, and—if needed—ask the First‑tier Tribunal to determine the premium. For informal (voluntary) extensions, there is no statutory formula; the premium is a commercial negotiation and can be higher or lower than a statutory outcome—but you must also guard against any new or retained rent terms that could harm mortgageability.

Legal Costs

Generally speaking, it will usually cost around £1,900 plus VAT plus disbursements to extend a lease by way of a section 42 notice (formal). However, the fee will vary depending on the particular transaction. Alternatively, if you are able to negotiate an informal lease extension with the freeholder, our legal fees are generally around £1,250 plus disbursements for such matters. With an informal lease extension, the leaseholder and freeholder can agree on a premium, length of extension and the terms of the extended lease between them. Our lease extension solicitors are here to explain the legal process in full, including fees which will be payable and answers to frequently asked questions.

To obtain a lease extension estimate, use our free, online Lease Extension Calculator.

Do You Pay Stamp Duty on a Lease Extension?

In most cases, you won’t need to pay Stamp Duty Land Tax (SDLT) on a lease extension, especially if you’re not paying a premium for a share of freehold. SDLT generally applies only when the lease extension premium is £40,000 or more and the property isn’t your main residence. For buy-to-let or investment properties, SDLT is usually charged at 3% of the premium.

If the lease extension premium is below £40,000, you won’t normally have to pay SDLT. However, where the premium exceeds £40,000, you must still submit an SDLT return, even if no tax is due. Always check with your conveyancer, as SDLT thresholds and rules can change.

If the property is owned by a limited company or Special Purpose Vehicle (SPV), SDLT can be more complex. Even if no premium is paid, you may still owe SDLT based on the market value of the lease extension. Our specialist SPV conveyancing solicitors can help you understand your SDLT position and complete your lease extension confidently.

Can you remortgage to cover the cost of a lease extension?

Yes, but if your lease has already dipped below 80 years it might be a bit more complicated. Obtaining a mortgage for a leasehold property with 85-90 remaining on it is usually not too difficult; plus if your lease has between 85-90 years on it, this is an excellent time to extend your lease which will save yourself hassle later. However, some lenders are not willing to lend on leasehold properties with fewer than 85 years remaining on the lease and most lenders will not lend on properties with fewer than 80 years remaining. This may make remortgaging to pay for a lease extension quite difficult for you! You can remortgage to pay for a lease extension for your short lease by making sure the lease is extended at the same time as your mortgage is granted, so that your new lease satisfies mortgage lender requirements. This can be a little trickier and requires both you and your conveyancer to act quickly.  In this situation it’s highly recommendable to instruct specialist lease extension solicitors. We can help!

What requirements do lenders usually have regarding lease extensions?

The requirements will differ depending on your lender, but the biggest concern for many of them is regarding how many years are remaining on the lease. Most lenders will require you to have at least 80 years remaining on your lease before they will lend, but some lenders will refuse to lend on properties with fewer than 85 years remaining on the lease. Previously, lenders would also be unwilling to lend on properties with onerous ground rent charges, due to the number of leaseholders who could neither afford or sell their homes due to escalating ground rent prices.Ground rent is less of an issue for many newly granted long residential leases because the Leasehold Reform (Ground Rent) Act 2022 restricts ground rent to a peppercorn for most new regulated leases granted on or after 30 June 2022 (subject to statutory exceptions). However, lender concerns can still arise depending on the specific lease terms and, for existing leases or certain voluntary extension structures, the ground rent position must be checked carefully.

Can I remortgage and extend my lease at the same time?

Yes, and it is generally a good idea to do so. The land registry is currently facing a large backlog which means it could take up to 12 months before your lease extension is registered. However, instead of waiting for the lease to be registered, you could arrange to complete your remortgage and lease extension on the same day, so that you won’t have to wait until your lease fulfils your lender’s requirements before you can remortgage.

My freeholder is not offering a lease extension at a reasonable cost. What can I do?

Although freeholders have no limit on how much they can charge for an informal lease extension, that doesn’t mean you have to pay their price. If you’re eligible, you could take the statutory lease extension route instead and serve a Section 42 notice on your freeholder, with which the premium will be determined by a formula, under the Leasehold Reform Housing and Urban 1993 Act. The formula used in the statutory route takes into account the value of your lease, which is why you should hire a surveyor to come and value the property first. If a surveyor  recommends a premium but your freeholder still insists you should pay more, you can take them to a first-tier property tribunal.  However, a tribunal is generally best kept as a last resort, as it’s not likely to be cheap – most freeholders tend to instruct legal teams to represent them, so it may well be necessary for you to instruct legal representation too for a better chance of a favourable outcome.

Can I amend other terms of my lease apart from its length and remortgage at the same time?

Yes, you can. While you would usually need your lender’s consent to make amendments to your lease’s terms, you will not need to obtain consent from your new lender for the changes as you can arrange your new mortgage over the property taking into account the proposed changes. For example, if you wanted to sublet your property (and your landlord has given consent to change the lease), you could remortgage with the changes to your lease terms already taken into account. If you want to change your property’s demise, for example to include loft space, it may be a good idea to make these changes while remortgaging and extending your lease at the same time.

Can I remortgage my lease onto a buy to let mortgage while extending its term?

There is no reason why it should be any more complicated to remortgage onto a buy to let deal while extending your lease as it would be remortgaging onto another residential deal. To find out everything you need to know about being a landlord, see our blog post. However, before you apply for a buy to let remortgage, bear in mind that eligibility for buy to let mortgages tends to be calculated depending on how much rental income your property is likely to make, rather than your affordability. Plus, becoming a landlord requires you to dedicate a lot of your time and money towards keeping your property in good repair and managing your tenancies. Not only do you need to be able to pay for your property’s maintenance, you need to be financially and mentally prepared for a bad tenant – they’re more common than you might think!

I want to sell my short lease property but can’t afford the cost of a lease extension. What can I do?

If you are selling a property with a short lease but do not have the funds to extend it beforehand, there are several practical options available. Subject to the buyer’s lender’s consent, it may be possible to arrange for the lease extension to be completed at the same time as the property purchase. This is often achieved by way of an informal agreement with the freeholder, coordinated by both parties’ solicitors to ensure the new lease is granted contemporaneously with completion.

Alternatively, the cost of the lease extension can be reflected in the agreed sale price. In practice, this means that the buyer and seller can negotiate a reduced purchase price to take into account the premium likely to be payable to the freeholder once the lease is extended. This approach allows the transaction to proceed without the seller needing to finance the extension in advance, while enabling the buyer to complete the extension shortly after purchase.

What other options do I have besides remortgaging to pay for the cost of a lease extension?

If you want to extend your lease but don’t like the idea of remortgaging to pay for a lease extension, there are other ways to fund your lease extension without breaking the bank.

Taking out a further advance

The most straightforward option will likely be just to borrow more on your current mortgage, if possible. While it will add years (and therefore interest) to your mortgage, it is a fairly simple straightforward way to fund a lease extension which doesn’t involve the hassle of remortgaging. However, you may run into trouble if you are not able to borrow more, such as if you’ve recently become self-employed or changed careers. It will depend on your lender’s requirements for further advances.

Taking out a second charge mortgage

Instead of remortgaging to pay for a lease extension, you could instead secure a second charge over your property. You will need your current lender’s consent to do so, plus they will probably require a deed of postponement in order to protect their security. Although it will mean you will have a second mortgage to pay off, they can be a great option for borrowers who haven’t been able to access additional borrowing. Plus, second charge mortgages tend to be significantly smaller than first charges and can be as little as £1,000 from some lenders.

Taking out a bridging loan

With a bridging loan, you can borrow enough to pay for your bridging loan for a short period, usually about 12 months, then repay the bridging loan gradually. However, bear in mind that you’ll likely need your lender’s consent before securing another loan on your property. Finding a bridging loan is not always easy unfortunately – see our blog post on bridging loan conveyancing to find out more.

Do I need a specialist lease extension solicitor to remortgage and extend my lease at the same time?

Yes you will – you will need a lease extension solicitor to complete the lease extension, and a that solicitor will also need to have knowledge of the remortgaging process. It’s also important to ensure your solicitor is on the lender panel for your new lender too, in order to avoid delays and subsequent higher costs. Our property solicitors are experts in both lease extension and remortgaging, easily capable of handling both at the same time. Plus, we are on the lender panels for the majority of high-street lenders including Barclays, Halifax, HSBC, NatWest, Nationwide and Santander. See the full list of our lender panels here.

How Starck Uberoi Solicitors can help

Our highly experienced solicitors are accredited under the Law Society’s Conveyancing Quality Scheme (CQS) in recognition of the high quality conveyancing services we consistently provide. With Starck Uberoi, you can be confident that your remortgage and lease extension will both be handled with the utmost efficiency. To book an appointment with one of our property solicitors, please call 020 8840 6640 or email solicitor@starckuberoi.co.uk.

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Our Brentford Solicitors, are located on the High Street in a grand three-story building, just a short distance from Brentford County Court. Our Belgravia solicitors are located Just a 5-minute walk from Victoria tube station in Grosvenor Gardens. Our Ealing solicitors are only a short walk from both Ealing Broadway and South Ealing and our Richmond Solicitors have the pleasure of overlooking the picturesque Richmond Green. Finally, our Solicitors in Canterbury are located in the within the UNESCO World Heritage Site of Canterbury Cathedral. Our partner, Raminder Uberoi, can also offer a Notary Public Service at any of our London offices.