The True Cost Of A Lease Extension

cost of lease extension

If you own a leasehold property there comes a time when the lease may need to be extended. A lease extension is an incredibly costly thing to do, but the only solution if you want to retain the property you have been investing in for the last however many years.

There is little education around leasehold properties, especially for unsuspecting first time buyers who can only afford a small flat to get onto the property ladder. I have been there.

When purchasing a leasehold property you will receive copies of the lease from your solicitors which outlines how many years are left on the existing lease term.

It’s very rare you will ever get advice from the estate agent or solicitors about the risk of short leases and what the cost of a lease extension would be, if you ever needed to do one.

The system is so dated that ‘fleecehold’ is a much more accurate depiction of what owning a leasehold property is. From onerous levels of ground rent, to rising service charges and short leases, these are a just a few things that you can expect from leasehold property.

In this article, I explore lease extensions further, and what, or if there is a true cost of a lease extension. There is little information online around average costs, apart from lease calculators which only give you a rough estimate, what this does not take into account is greedy freeholders and how this can increase costs tenfold.

Do I Need A Lease Extension?

You should always choose to start a formal lease extension before you hit 80 years and below on your lease. The shorter the lease the more expensive it costs to extend, as it attracts something called marriage value. A shorter lease is also much less attractive to prospective buyers.

It’s incredibly important to start the formal lease extension before marriage value sets, this is where the value of the property increases over time and this increase in value is shared between the freeholder and leaseholder (marriage value) under current law.

What Does A Lease Extension Do?

A lease extension will add 90 years onto the remaining term of your current lease, whilst reducing the ground rent to a peppercorn (nil or a nominal amount). However, there are occasions when leases can be extended to 125 or 999 year lease terms, but these are not so common nowadays.

Can A Freeholder Refuse To Extend A Lease?

A freeholder can not legally refuse to extend a lease, this is because if a lease is left to end, the freeholder retains ownership of the property as it becomes a freehold property.

However, whilst they cannot refuse it, they can certainly slow down the initial process considerably, especially if your lease term is nearing marriage value.

How Is A Lease Extension Cost Calculated?

A lease extension can cost thousands of pounds, but it does vary based on the length of term remaining on the lease, and current ground rent payments. 

For a rough calculation, you have to work out the total ground rent over the life of the lease. Then divide the total by the number of years to run on the lease. This will give you an average value per year.

You can then use the average value per annum to work out the premium. This is not 100 % accurate, but it will give you a ball-park figure. There are also lease extension calculators online that can help with getting to this point.

The freeholder may well also add on additional costs (which they do) to the process which can set you back even more money. This is totally dependent on who the freeholder is, they often charge an enquiry fee, legal fees for their team and then the premium.

You will also have to appoint your own solicitor to ensure the formal lease extension is carried out in line with the law.

What Is The Cost of A Lease Extension?

The cost of a lease extension can vary greatly due to the disparity of freeholders, their charges and how long is left on the lease. A very general cost of a lease extension seems to be anywhere around £8,000-£15,000. But it can be less, or a lot more. It really is freeholder dependent.

If you are extending a lease before you hit the 80 year mark then it will be less expensive than when it starts to attract marriage value.

Below is an example of a real lease extension cost to give you an idea of the costs involved, and the situation;

  • Remaining lease term: 81 years
  • Premium: £4,620.00
  • Legal fees & valuation: Around £1,500.00

This would be plus additional legal fees generated by the freeholder and in this case, the person had to appoint a surveyor to get another opinion on the valuation. All in all it cost them around £9,500.00, including all fees.

This would add 125 years to the lease (normal lease extensions add 90 years and reduce ground rent to a peppercorn, but it does vary based on the freeholder you are dealing with).

I have looked at many different peoples experiences and costs on a lease extension in leasehold forums, and this is one of the cheaper lease extensions that I have seen, just a point to note that this is for formal lease extensions.

The informal lease extension route is often a lot cheaper, but it does not protect you legally, and your freeholder can amend the lease to input additional clauses that could make your situation worse in the future.

Can You Negotiate A Lease Extension Cost?

If you receive an offer from your freeholder for the lease extension that is grossly different to your valuers, you can try to negotiate the lease extension cost.

In order to negotiate a lease extension cost you will need to bring all of your evidence to the table with solid reasoning on why your solicitor/valuer is confident that the true premium should be lower, X amount.

If the freeholder is persistently nudged and is not moving and you still feel that the premium is grossly overpriced, then you can consider starting a first tier tribunal process regarding the premium for the lease extension.

Freeholders rely on leaseholders being put off by the process (this is a known tactic they use) to try to overcharge them. 

The courts can be very reasonable, and if the freeholder cannot justify their calculation, then they will simply lose their case.

In Summary

The unfortunate thing about a lease extension is that there is no off the shelf cost, or one size fits all. The lease extension cost is determined by a) remaining term left on the lease in years b) who the freeholder is c) legal fees of both parties d) if marriage value has set in (below 80 years and e) if you go into negotiations.

Always consult a legal professional who specialises in formal lease extensions, it’s best practice to go down the formal lease extension route as you are legally protected.

The informal route is where errors can happen and you can be taken advantage of as you are not protected by the law, and it can often still cost thousands of pounds for the privilege of it, whilst not actually being better off.

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Nicole Sage

Nicole Sage is the founder of Sleek-chic Interiors and is a highly experienced interiors writer and skilled home renovator who has a passion for all things design. She has been featured as an authority at Pinterest, Ideal Home, Daily Mail and in countless other interviews. For 8 years, Nicole has written, observed key interior trends, renovated and undertaken interior short courses at the renown KLC school where she has gained her grounding interior design principles. With a keen eye for detail and a love of creativity, she shares her expertise on the latest interior trends, practical DIY tutorials, and styling inspiration to help others transform their homes into stunning spaces. With a commitment to delivering informative and engaging content, Nicole inspires and empowers readers to explore their own unique sense of style and create beautiful, personalised interiors. Contact her at for interiors advice, colour questions and any commentary.

2 thoughts on “The True Cost Of A Lease Extension”

  1. Hi Nicole

    Would the costs be less if all Leaseholders applied together, than just myself applying for an extension.

    Kind regards



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