Lease Extension Calculator UK

How This Calculator Works

The calculator applies the statutory valuation methodology set out in the Leasehold Reform, Housing and Urban Development Act 1993. The premium you pay to your landlord compensates them for:

• Loss of ground rent: The ground rent you would have paid over the remaining lease term.
• Loss of reversion: The delay in the landlord regaining possession of the property (reversion) by adding 90 years.
• Marriage value (if applicable): Half of the marriage value calculated under the statutory valuation assumptions, if your lease has 80 years or fewer remaining.
• Any other losses: Other losses the landlord can demonstrate will result from granting the new lease.

The calculator estimates the premium based on the information you enter. The valuation formula uses actuarial and property valuation assumptions that may differ from those used by surveyors in practice. For a precise figure, you should obtain a professional valuation from a surveyor experienced in leasehold enfranchisement.

What the Calculator Results Mean

The calculator provides a clear breakdown of your estimated lease extension premium:

• Estimated Premium: The total illustrative amount you might pay to your landlord for the lease extension.
• Loss of Ground Rent: The estimated compensation for future ground rent lost by the landlord.
• Loss of Reversion: The estimated compensation for the landlord's delayed reversion.
• Marriage Value (if applicable): The additional premium estimated if your lease has 80 years or fewer remaining, calculated as 50% of the marriage value under the statutory valuation assumptions.
• Estimated New Lease Term: The length of your lease after extension (current term + 90 years).

Understanding your estimated premium helps you budget for the extension and decide whether to proceed now or wait. All figures are illustrative estimates only and should not be relied upon as a formal valuation.

Example Calculation

Illustrative Example 1: Lease with 85 Years Remaining

A flat valued at £250,000 with 85 years remaining and a £100 annual ground rent.

• Property Value: £250,000
• Remaining Lease Term: 85 years
• Annual Ground Rent: £100
• Marriage Value: Not applicable (lease above 80 years)
• Estimated Premium: Approximately £5,000 - £8,000 (illustrative estimate only)

Illustrative Example 2: Lease with 75 Years Remaining

A flat valued at £250,000 with 75 years remaining and a £100 annual ground rent.

• Property Value: £250,000
• Remaining Lease Term: 75 years
• Annual Ground Rent: £100
• Marriage Value: Applicable (lease below 80 years)
• Estimated Premium: Approximately £15,000 - £20,000 (illustrative estimate only)

Illustrative Example 3: Lease with 90 Years Remaining

A flat valued at £300,000 with 90 years remaining and a £250 annual ground rent.

• Property Value: £300,000
• Remaining Lease Term: 90 years
• Annual Ground Rent: £250
• Marriage Value: Not applicable (lease above 80 years)
• Estimated Premium: Approximately £4,000 - £6,000 (illustrative estimate only)

Understanding the 80-Year Threshold

The 80-year threshold is critical for lease extension costs. Under the 1993 Act, if your lease has 80 years or fewer remaining, you must pay an additional element called marriage value.

What is marriage value? Marriage value represents the increase in the property's value resulting from the lease extension. The statutory valuation methodology requires you to pay 50% of the marriage value calculated under the statutory assumptions to the freeholder as part of the premium.

Why is the 80-year threshold so important? Once your lease drops below 80 years, the marriage value becomes payable. This can add tens of thousands of pounds to your lease extension cost. For example, a flat worth £250,000 with 75 years remaining might have an additional marriage value component of £10,000-£15,000, significantly increasing the premium. These figures are illustrative estimates only.

What happens below 80 years? When your lease drops below 80 years, the value of the property may decline more rapidly, as many mortgage lenders apply stricter lending criteria to properties with shorter leases. This, combined with the marriage value calculation, means waiting to extend can become very expensive.

For these reasons, it is generally advisable to consider extending your lease before it drops below 80 years. However, the specific circumstances of your property and your personal financial position should be taken into account.

Our Leasehold Valuation Calculator provides more detailed calculations for leasehold properties.

Leasehold Reform: What You Should Know

The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024 and introduces some of the most significant changes to leasehold law in decades. However, commencement of the provisions depends on Government commencement orders, and not all provisions are yet in force. Implementation is expected to be phased, and the precise timing of commencement remains subject to future legislative and regulatory developments.

For lease extensions, the key proposed changes include:

• Standard extension term: The Act includes provisions that would extend the statutory lease extension term from 90 years to 990 years for both houses and flats, once the relevant provisions are brought into force.
• Removal of marriage value: The Act includes provisions to abolish the marriage value calculation, which should significantly reduce the cost of extending leases below 80 years if and when these provisions are commenced.
• Simplification: The process is expected to be simplified, with reductions in legal costs and time.

When will these changes take effect? The government has indicated that implementation of these reforms is expected over 2025 and 2026. However, the commencement dates for specific provisions have not all been published, and leaseholders should not assume these reforms are yet in effect. The commencement of provisions depends on Government commencement orders, and the implementation timeline remains subject to future legislative and regulatory developments.

Should you wait or extend now? The decision depends on your individual circumstances. If your lease is approaching 80 years, waiting for reforms that may not be commenced on a specific timeline could result in additional marriage value costs. Conversely, if your lease has plenty of time remaining, waiting may potentially save you money if and when marriage value is abolished. You should base your decision on current law and your individual circumstances, and professional advice is recommended.

Our Leasehold Reform Calculator can help you understand the potential impact of reforms.

Factors Affecting Your Lease Extension Premium

Property value: The higher the property value, the more the lease extension is likely to cost. This is because the loss of reversion and the marriage value component are larger for more valuable properties.

Remaining lease term: The shorter the lease, the more the extension costs. Leases below 80 years are significantly more expensive due to marriage value.

Ground rent: Higher ground rents increase the cost of the extension because the landlord loses more future income. The calculator factors this in.

Regional variations: Lease extension costs vary by region, with higher costs in London and the South East where property values are higher. These are illustrative market observations only.

Voluntary versus statutory: A statutory lease extension under the 1993 Act follows a prescribed formula. A voluntary extension outside the Act is a private agreement between you and your landlord, which may be cheaper or more expensive depending on negotiation.

Valuation costs: You will typically need to pay for a surveyor's valuation and legal fees as part of the process, which are not included in the calculator's premium estimate.

Our Leasehold Valuation Calculator can help you understand your property's value in the context of its lease length, and our Leasehold Reform Calculator can help you assess the potential impact of proposed reforms.

Common Mistakes

Waiting too long to extend. Once your lease drops below 80 years, marriage value applies, significantly increasing the cost. Many leaseholders wait too long, making the extension much more expensive.

Forgetting about ground rent. Ground rent can significantly affect the premium, especially if it is high or has review clauses. The calculator accounts for this, but many buyers overlook it when estimating costs.

Not budgeting for valuation and legal fees. The premium is only part of the cost. You will need to pay for surveyors' valuations and legal fees, which can add several thousand pounds.

Assuming the landlord will cooperate. If the landlord disputes the valuation, the process can become lengthy and expensive. The statutory process provides a route, but it takes time.

Ignoring the impact on mortgageability. A short lease can make it difficult to sell or remortgage, as many lenders apply stricter lending criteria to properties with shorter leases. Extending the lease not only reduces your future costs but also helps protect your property value.

Our Leasehold Valuation Calculator can help you understand your property's value in the context of its lease length, and our Leasehold Reform Calculator can help you assess the potential impact of proposed reforms.