By Jason Patterson the Short Lease King
Extending your lease, whether you are an owner occupier or a property investor can be a daunting task. Coming up are some important considerations to help you aid your personal journey through the lease extension process.
- Marriage Value
80 years is the cut off point in relation to your flat becoming a short lease flat. This is known as the marriage value. After this point your flat will start to diminish in value.
- Freeholder Quote
Contact the Freeholder for a lease extension quote. The Freeholder can either be contacted by yourself personally, the homeowner, or via your solicitors.
- Routes to Extend Your Lease
There are two routes you can use to extend your lease:
The voluntary (informal) route, which allows flexibility on the length of the extension (for example 99, 125, or 999 years), with zero ground rent applied to the extended portion of the lease; and
The statutory Section 42 route, under which 90 years are added to the existing lease with a peppercorn (zero) ground rent.
- What Costs are Involved?
The owner of the property must pay for the Freeholders legals, your legals and the lease extension surveyor or surveyors.
- Build a Track Record of Reliability
Reputation is a tangible asset in property investment. Buyers who consistently complete transactions on time and as agreed develop a competitive advantage in future negotiations.
This reliability becomes particularly valuable when speed is used to negotiate favourable terms. Sellers, agents, and financiers remember investors who deliver on their commitments, creating opportunities for preferential access to future deals.
- Difficult Freeholders
If the freeholder is being difficult via the voluntary lease extension route then serve them with a Section 42 notice. The Freeholder cannot refuse a lease extension via the Section 42 route.
- Agreed Premium
Once you agree a premium with your freeholder you have three months to complete the lease extension otherwise the freeholder is well within their rights to restart the process as the lease extension quote will now be invalid.
- Non-Agreed Premium
If the freeholder and yourself cannot agree a premium via the Section 42 route after 6 months of negotiations, then you can apply to the tribunal and they will decide what you will pay for the lease extension based on the surveyors reports and other evidence.
- Lease Extension Formula
There is ONE lease extension premium formula with many variables. The formula includes elements and variables such as the deferment rate, capitalisation rate, marriage value, end value of the flat, loss of ground rent, current ground rent, plus more.
- Leasehold and Commonhold Reform Bill
The Leasehold and Commonhold Reform Bill draft has now been released (January 2026). Labour have stated that this will be passed through Parliament for debate and by late 2028, a decision on the updated lease extension process including the marriage value (which makes up 50% of the lease extension premium) 990 years instead of 90 years for the lease extension and ground rent changes will be made.
Successfully completing a lease extension and working through each stage of the process builds practical knowledge and a clearer understanding of how lease extensions operate.
For those considering a short lease flat, or seeking guidance in relation to leasehold flats, assistance is available by emailing info@jasonpatterson.co.uk or via www.jasonpatterson.co.uk.
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