How much does it cost to extend a lease under the 2024 Act?

Full answer

Extending a residential lease has historically been complex and often expensive, particularly once the remaining term drops below 80 years, but the Leasehold and Freehold Reform Act 2024 is intended to make the process both cheaper and simpler once fully implemented. **How the premium is calculated** The cost (premium) to extend a lease is based on a formula considering three main elements: the value of the ground rent the freeholder gives up, the value of the freeholder's 'reversion' (getting the property back at the end of the lease, discounted for how far away that is), and, historically, marriage value if the lease had fewer than 80 years remaining. **Marriage value abolished** Marriage value represents the increase in a property's value once the lease is extended (a flat with a short lease is worth less than one with a long lease, and extending closes that gap) -- under the old rules, the leaseholder had to pay the freeholder 50% of this marriage value if the lease had under 80 years left. The 2024 Act abolishes marriage value from the calculation entirely, which should make extending leases under 80 years substantially cheaper once this provision is commenced. **Extended term and peppercorn rent** Under the reformed process, an extended lease will run for 990 years (up from 90 years previously) with ground rent reduced to a peppercorn (nil), removing any future ground rent liability on the extended term. **No minimum ownership period** Previously, leaseholders had to have owned their property for two years before they could apply for a statutory lease extension. The 2024 Act removes this requirement, allowing new owners to apply immediately after completion. **Costs still payable** You will typically still need to pay: the calculated premium itself, your own solicitor and valuer fees, and the freeholder's 'reasonable' legal and valuation costs (the Act aims to make freeholders' cost recovery fairer and more transparent, and in some cases leaseholders may no longer have to pay the freeholder's costs at all for certain claims). **Timing matters** Because implementation of the 2024 Act is happening in stages via secondary legislation, whether you benefit from the new, cheaper rules depends on exactly when you formally start the lease extension process -- get up-to-date advice from a specialist leasehold valuer or solicitor before committing to a premium under the old rules if the new provisions may soon apply to you. **Practical tip** Get a professional valuation before negotiating, since informal lease extensions agreed directly with a freeholder are not bound by the statutory formula and could cost more than the legal minimum.

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More answers

• How does the Leasehold and Freehold Reform Act 2024 affect ground rent?
• What is marriage value in a lease extension?