How to extend the lease of a Central London property?

If you own a Central London flat, the chances are it’s a leasehold property. In general terms, the longer your lease, the more your property is worth, but extending a lease on a flat is a costly exercise.

Apartments in areas such as Kensington, Paddington and Chelsea are typically leasehold, so if you are a flat owner, you may need to extend your lease at some point in the future.

What is leasehold property?

Leasehold is the most common form of flat ownership in England and Wales. It means that while you own your flat, you do not own the building but are renting it for a fixed period and paying ground rent to the owner.

As time goes by, the lease period reduces. If you don’t extend your lease, it will end up at zero, and the ownership of your flat will revert to the freeholder. It’s advisable to look into a leasehold extension once the fixed period has 90 years remaining. When you decide to sell the flat, the lease is transferred to your buyer.

If you are considering buying a flat, you should ask about the length of the leasehold and some other important questions that we have listed in our article: Questions to Ask When Buying a Leasehold Flat.

Why should I extend my lease?

No matter how happy you are with your home or investment property, it is likely that you will wish to sell it in the future. When you offer it for sale, the length of your lease will impact its value.

A short lease will seriously reduce the value of the flat and could mean that you can only sell it to a cash buyer because most lenders will not offer mortgages on properties with a lease of less than 60 years. In addition, they will usually charge higher rates for mortgages on properties where the time remaining on the lease is less than 70 years.

Want to find out more? Take a look at the Renters’ Rights Act 2025 and our landlord inventory template.

Who can extend a lease?

The good news is that under the 1993 Leasehold Reform, Housing & Urban Development Act, flat owners are entitled to a 90-year extension to their lease at a fair market price as long as they have owned the property for at least two years. The other condition is that the lease was initially granted for at least 21 years.

When should I extend my lease?

It is advisable to apply for a lease extension if the term remaining is less than 90 years. The primary reason for this is that if your property has a shorter lease length, this will reduce its value.

In addition, if you are looking to sell, a long lease could be the crucial difference that persuades a prospective buyer to choose your property over another.

How much does it cost to extend a lease?

How much it costs to extend your lease will depend on the number of years remaining on that lease and the property’s value.

The total cost will comprise the actual cost of the extension, the professional fees involved, and the land registry fees. You will have to cover your own legal and valuation fees and those of the freeholder.

The extension cost is calculated by assessing the financial loss incurred by the freeholder in granting the extension. This will depend on several variables, including the ground rent, other lease terms and the property’s market value.

Providing an accurate estimate of the costs you will face when extending your lease is impossible, as these will vary dramatically according to the unique circumstances associated with each flat. However, you can try using an online lease extension calculator for an approximate cost estimate.

Here is an example of the typical cost to extend a lease of a central London flat worth £200,000 by 90 years:

You can expect to pay a total of £9,500 to extend the lease of a flat valued at £200,000, which has 95 years left on the lease. The costs could rise to £11,000 if the lease has 85 years and to £31,000 if there are only 60 years on the lease.

If your lease has less than 80 years when you extend it, the cost will dramatically increase. This is because you will have to pay the freeholder half of the potential grains, which is the marriage value.

What is the marriage value?

A lease term of less than 80 years will become more expensive to renew. When such a lease is extended, the freeholder is entitled to half of the increase in the value of the property and the fee for extending the lease. This is known as the ‘marriage fee’ – because it marries two costs together.

Your freeholder may hope you will allow your lease to fall to 80 years or less so they can enjoy a significant windfall. If your lease has around 83 years to run, the time to act is now.

The Leasehold and Freehold Reform Act 2024, once fully implemented, will make it easier and cheaper for leaseholders to extend leases. Some provisions within the Act are already implemented but other elements such as a ban on marriage value fees are currently at consultation stage.

Should I seek professional advice?

Determining the cost of extending a lease requires a complex calculation, and often a subjective one, so it will likely be open to negotiation. There are two options for the lease extension process; you can either go through the formal or informal approach.

Informal vs formal lease extensions

Informal lease extensions involve the leaseholder approaching the freeholder directly to try and extend the lease. Under the formal route, there is a strict procedure with set timescales stipulated under the 1993 Leasehold Reform, Housing & Urban Development Act.

If both parties cannot agree on a lease extension, the leaseholder can apply to the tribunal to decide. If you want to learn more about how the Tribunal process works, you can download a guide to the First-tier Tribunal from the Courts and Tribunals Judiciary website.

Do I need a solicitor to extend my lease?

It is worth enlisting the services of a lease extension valuations surveyor, who specialises in lease extensions, together with a lease extension solicitor as soon as possible. Their expertise and advice could save you a great deal of money overall.

A solicitor will prepare all the legal paperwork for your lease extension, liaise with the surveyor on an extension valuation and be the point of contact for communicating with the freeholder. They will also negotiate on your behalf until an agreement is reached. If the freeholder does not accept your terms, the solicitor can apply to a First-tier Tribunal.

It is essential to appoint a solicitor who has expertise in extending leases. The Association of Leasehold Enfranchisement Practitioners is an excellent place to start researching. Costs vary, so ensure you obtain quotes from different companies.

What is the lease extension process?

To start proceedings for extending your lease using the formal route, follow these steps:

1. Contact the freeholder and inform them that you wish to extend your lease and are pursuing the statutory route.
2. Find and appoint a lease extension solicitor (they should be a member of the Association of Lease Extension Practitioners (ALEP).
3. Appoint a valuation surveyor with experience working on local property lease extensions.
4. Serve a Section 42 Notice to the freeholder (your solicitor will do this on your behalf).
5. Pay the deposit (if required), which is £250, or 10% of the lease cost if that amount exceeds £250.
6. Your solicitor will negotiate the price of the lease extension, referring to the tribunal if necessary.
7. You pay the confirmed price, and the lease is extended.

Want to know more? Read about what expenses you can claim as a landlord and how to reduce capital gains tax on property.

How long does it take to extend a lease?

The time it takes to extend the lease will depend on several factors, including how efficient your solicitor and valuer are. Typically, the process will take 3 to 12 months, depending on whether any negotiation is required and whether you need to go to a tribunal.

Specialist leasehold services lawyers can advise you on all aspects of the process, including eligibility.

The first thing to establish is that you are eligible for an extension. There are several criteria, but it is generally possible if you have been a legal owner of the property for two or more years.

Can a freeholder refuse to extend a lease?

According to the Leasehold Reform Housing and Urban Development Act 1993, a freeholder cannot refuse to grant a lease extension if you have owned the flat for over two years. Ensure you check your eligibility and discuss it with your solicitor.

Should I try to buy the freehold instead of extending my lease?

If you wish to extend the lease on your property, it could be beneficial to buy the freehold instead. Under the Leasehold Reform, Housing and Urban Development Act 1993, leaseholders have the right to collectively purchase the freehold of their building, providing they meet specific criteria.

You would then own the property outright, but you will need the agreement of at least half of the leaseholders in the building.

It is worth exploring, but you must weigh the costs and potential benefits before proceeding with lease buying.

Will the leasehold reform bill help me extend my lease?

Yes, the leasehold reforms are intended to make the process for extending leases easier for leaseholders and should remove unfair costs, including unreasonable ground rents. The Leasehold and Freehold Reform Act was passed into law but only some of the legislation has been implemented. Many elements of the legislation are going through consultancy, so it is taking time for some parts to come into force.

One of the major changes that has already been implemented is the removal of the requirement for leaseholders to wait two years after purchasing a property before they could extend the lease. Leaseholders can now apply to extend their lease once ownership is registered at the Land Registry.

Ground rent for new leases has also been abolished. This ground rent removal applies to new leases created after 30 June 2022. For leases created prior to the date, when you arrange a leasehold extension, ground rent will be reduced to zero.

The Act should also increase the standard new lease extension term to 990 years, rather than the 90-year maximum that is currently allowed on flats. This will also apply to new leases with shared ownership of the property.

The new lease legislation should also have more benefits for leaseholders, including more transparency around service charges – however much of the implementation is still being discussed – so watch this space.

In summary

Extending a lease or buying the freehold is not simple and will likely be costly. The freeholder may have different lease terms for different types of Central London flats, from an apartment to a purpose-built or converted flat. Before you proceed, it’s vital to seek the advice of experienced professionals. They could help you avoid an expensive mistake, as well as helping you achieve the best possible deal.

Understand the process of extending a lease?

Plaza Estates specialises in leasehold properties as a Central London estate agent operating from Knightsbridge and Marble Arch. For more information about buying or selling a leasehold property, contact us today.

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