Lease Extension Cost: How Much And What's The Process?

Written by Millie Archer

I love all things property and have a real eye for detail. I’m always reading up on property news, whether it be renting a first property or buying a mansion.

We look at all things lease extension, including the lease extension cost and what to do when a short lease is affecting your saleability...


In England, there are currently around 4.5 million people who own their homes on a leasehold basis (Money Saving Expert). This means that, although they own the house, they don’t own the land it sits on, making them subject to ground rent.

As a lease approaches 80 years left, lease extension are two words that may start to come into mind. On a lease under 80 years, you become liable to pay ‘marriage value’ alongside the increasing lease extension cost. The property’s saleability can also be affected, with the property becoming increasingly harder to sell…

If you’re reading this thinking ‘wait I’m in a leasehold property with my lease approaching the wrong side of 80!’ then don’t panic – we’re here to help!

We’re going to talk you through all things lease extension – including the lease extension cost and what to do if a lease extension is refused.

We’re also going to help you with your options if you’re looking to sell your leasehold and you see that the short lease is starting to affect your saleability…

Whether you want to know exactly how much your lease extension cost will be or just want some information on leases in general, this menu will help you find an answer:

Don't want to deal with the lease extension cost?

Sell your property instead!


What's a lease?

A lease is an agreement between the leaseholder and the freeholder, or landlord, guaranteeing the leaseholder use of the property and the freeholder regular payments for the specified period.

The lease also states the leaseholders and freeholders' responsibilities and rights. If either party were to break the terms of the lease, they would face serious consequences.

Leases don’t exist for freehold properties, as this means you own the whole property including the land it’s built on. Whereas with leasehold property, you own the property but not the land, making you subject to ground rent.

What is a lease extension?

A lease extension does exactly what it ‘says on the tin’. It’s the process of adding years back onto the lease and extending the time you have before the property goes back to the landlord/freeholder.

This process can be done by dealing with your freeholder directly, or you can serve a Section 42 Notice. However, this will require the help of an experienced solicitor, making it a more costly process.

How long should a lease extension take?

A lease extension can take anywhere between a few months to a year. The reason it can take so long is because you need to get valuation advice, serve a Section 42 Notice and then receive a Section 45 Notice, which is sort of like a ‘counter response’ from the freeholder.

A Section 42 Notice is served by your solicitor to your freeholder as a formal request to extend the lease. It states the premium you’re willing to pay and gives the freeholder some time to respond. If it’s not served correctly, then your freeholder can reject it and you must wait a further 12 months until you can try again.

You have to give the freeholder at least 2 months to respond after serving the Section 42 Notice and then a further 2 months for negotiations. If after this an agreement can’t be reached, it will be referred to the ‘Leasehold Valuation Tribunal’, which is what can cause the process to take in excess of a year.

How does extending a lease work?

Firstly, you must be deemed as a ‘qualified leaseholder’ in order to apply for a lease extension. To are seen as ‘qualified’ if:

  • You have owned the property for at least 2 years
  • The original lease granted was for a term in excess of 21 years


We know a lease extension looks to be a daunting and confusing experience, so we want to try to make it seem a little easier. To help you out, we’ve got a step-by-step guide of the lease extension process, so sit back and take it all in:

  1. Confirm you’re an eligible leaseholder. *HINT – you will need to comply with the criteria above to be eligible*
  2. Find out who owns the freehold and if you can’t find the freeholder, you should apply for a vesting order
  3. Appoint a valuation surveyor with expertise in leasehold extension legislation and the local property market. They should be a member of RICS and ideally Association of Lease Extension Practitioners (ALEP)
  4. Appoint a lease extension solicitor who has expertise in the field and is a member of ALEP
  5. Decide whether you will approach the freeholder personally or if you want your solicitor to do this for you
  6. If the freeholder is willing to negotiate, make an informal offer
  7. If the freeholder accepts this informal offer, you can then make a formal offer
  8. If the freeholder hasn’t accepted your informal offer, then you will need to get your solicitor to serve a Section 42 Notice
  9. You will then need to pay a deposit, if the landlord requires one. The deposit will be either £250 or 10% of the lease cost – whichever is higher of the two
  10. Your landlord will then respond with a Section 45 Notice, within 2 months. This will either be accepting or declining your offer. If they decline, they may suggest some alternative terms rather than straight out refusing any lease extension
  11. When, and if, you come to an agreement, your house repayments lender will have to approve the lease extension. After this, your solicitor will then finalise the extension and you can breathe a big sigh of relief *phew*


In order to come to an agreement, you may need to negotiate slightly with the freeholder. If you’re still unable to come to an agreement, you will have to apply to the ‘Leasehold Valuation Tribunal’, but it’s important to keep in mind this will make the process both more costly and more time-consuming.

Can't keep up with these confusing steps?

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Benefits of lease extension

Despite the obvious downsides of the lease extension cost and time taken, there are also several benefits that come with a lease extension. We’ve made a list of all the pros of extending a lease to let you decide whether or not they outweigh the cons:

  • As the lease length goes down, the cost of extending goes up. This makes it beneficial to extend the lease early
  • If you need to redoing house payments, having a property with a short lease makes it much harder and so by extending the lease you're making the redoing house payments process much easier
  • If you have a lease with less than 80 years left, extending a lease will increase the value of your property
  • A short lease will affect the ‘saleabilty’ of the property, as few house repayments lenders will be prepared to lend, making the pool of potential buyers limited to mainly cash buyers
  • If the lease has below 80 years left, it will attract ‘marriage value’, which refers to the increase in the value of the property as a result of a lease extension. Your freeholder will be entitled to 50% of the value which is added through a lease extension

Lease extension cost

How much does it cost to extend a lease?

Based on data by Leasehold Advisory Service, the lease extension cost for a flat valued at £200,000 with £200 annual ground rent could be anything from £7,500 on a property with a 95-year lease to £26,500 for a property with 60 years left on the lease, including the professional costs. This data shows how big the lease extension cost may be.

Two factors that make up the lease extension cost is the premium you will have to pay alongside the professional fees and taxes.

The premium

You can’t put an exact price on the premium as the final figure will be a result of negotiation between the landlord and yourself. To help you get a rough estimate, you could use a lease extension calculator. It’s a quick and easy way to get an idea of the lease extension cost, but you should remember it is just an idea and could therefore be inaccurate.

As a general guide, the premium will cost around £5,000 or more.

Professional fees and taxes

By ‘professional fees’, we mean conveyancing fees, surveyor’s lease extension survey costs, landlord’s legal fees and landlord’s lease extension survey costs. As an estimate, this part of the deal could cost around £3,000, if not more.

If this is your only property, and therefore your main residence, you will also have to pay stamp duty tax if the premium is above £125,000. If you’re extending the lease on a property that classifies as a second home, you will have to pay the higher ‘second home stamp duty’ rates if the premium is over £40,000.

Essentially, the formula for your lease extension cost will be:

Essentially, the formula for your lease extension cost will be: The premium + yours and your landlord’s professional costs + SDLT liability = grand total of lease extension cost

How much do solicitors charge for lease extension?

A lease extension solicitors’ fees will usually cost between £700 to £1,200. The price will differ depending on the level of negotiation needed and the complexity of the case.

Can't afford these lease extension costs?

Why not sell instead...


Can a lease extension be refused?

Sadly, if you decide to try negotiating yourself with the landlord/freeholder, they have every right to refuse you a lease extension, as there are no rules against them being able to do this.

In some cases, they may not outright refuse a lease extension but may instead give you new terms of the lease. These new terms can be undesirable, for example, increased ground rent, making you potentially unable to be able to agree to these new lease terms.

What happens if the lease extension is refused?

If your lease extension negotiations are rejected, then you have a few options. You could go down the Section 42 Notice route with the help of a solicitor but as we mentioned earlier this is both time consuming and costly and so may not be an option suitable for everyone.

Another option for you if your lease extension is refused is buying the freehold of the property. In order to consider this option, you must meet the following criteria:

  • The current lease must have at least 21 years left
  • Must not be a commercial lease
  • If in a flat - building must contain at least 2 flats
  • If in a flat – 50% of the building’s flats must take part in the buying
  • The building must not be a charitable housing trust, national trust or cathedral precinct


If you meet the above criteria, then you can proceed down one of two routes to try to buy the freehold – the formal or informal route.

Through the informal route, you will face fewer costs and you will be able to go directly to the freeholder to negotiate with them. A downside of the informal route is that it offers no protection to leaseholders, with no set timescales that must be worked to.

However, if negotiations are to fall through, those leaseholders who comply with the criteria will be able to go down the formal route.

Following the formal route differs from the informal route as it means all parties must follow strict instructions and timescales set out by law, with more protection offered to leaseholders if they’re unable to agree on terms with the freeholder.

The formal route, however, is a more costly option, with the need for solicitors to get involved, meaning the costs could start to stack up, getting near to the lease extension cost.

If buying the freehold is an option, you’d rather take instead of lease extension, one thing you could do is to go down the informal route initially and, should negotiations fall through, then you can go down the formal route.

Although buying the freehold will mean you no longer have a lease and full control over the property there are several downsides. For example, it is a time-consuming, costly manoeuvre and relies on your neighbours’ co-operation. Alongside this, the lease still stays the same and so will require help from a solicitor to rewrite or rephrase the lease, incurring further costs.

A final option you have if the lease extension cost is too high for you is to sell the property. But you need to keep in mind that a short lease could affect the saleability of the property.

Want to sell but worried about the saleability?

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Does lease extension affect saleability?

If the lease extension cost is too high for you, you will likely start looking at selling the property. As we said earlier, a short lease will affect the saleability of a property, as very few house repayments lenders are prepared to lend, meaning the pool of potential buyers is limited to cash buyers.

Finding a cash buyer on the open market can be very difficult, with the majority of people needing a house repayments scheme to buy. This really limits your selling options.

Other than the open market, you could also look to sell your property through an auction. At auction, you will get buyers who are generally looking for slightly different properties than what is on the open market, meaning there’s more of a chance of finding the right buyer for your short lease property.

At the auction, if you are to successfully find a buyer, they must put down a deposit immediately and complete within 28 days. This makes a faster sale, meaning you can get out of paying ground rent, service charges and other fees for your leasehold property.

However, one of the downsides to auction is there are fees you will need to pay – you know, room hire, commission fee, a fee to the auctioneer, and more. Although the costs may not be as high as the lease extension cost, the fees still make it a costly experience.

Alongside the fees, there’s also no guarantee you will be able to find a cash buyer at auction, leaving you with no sale but fees to pay.

We do have another option for you, which will guarantee you a sale with a cash buyer and you don’t have to pay a penny…

Sell to us!

Here at The Property Buying Company, we’re a cash buyer of houses buying any house in any location – that’s right, we won’t be put off by any short leases! We have over 50 years of combined experience, so we really have dealt with it all!

We cover all the fees for you (yes even the legal fees) meaning you can sell your short lease property without having to worry about costs or saleability!

We also have multiple good reviews on Trustpilot, feel free to check them out, which we believe makes us a cash buyer you can trust. We only require one quick viewing of the property before we make you a guaranteed CASH offer, which we can have in your bank in as little as 7 days!

Why not give us a call or fill in our online form today to get yourself a guaranteed cash buyer, without having to worry about the lease extension cost or the effect of a short lease on saleability…

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