Extend Your Lease Step-by-step guide & calculator

If you own a flat, letting your lease drop too low wipes its value quicker than dodgy stone-cladding. Yet in England and Wales, powerful laws let you extend leases for a fair price.

This guide includes whether you should extend, including a free Lease Extension Calculator to give an instant steer, and step-by-step how-to.

This guide's been written in association with Consumer Focus and with kind help from The Leasehold Advisory Service, Crosse + Crosse Solicitors and Clarke Mairs LLP.

We’ve made every effort to ensure this guide's accuracy, yet it doesn't constitute legal advice tailored to your individual circumstances. If you act on it, you do so at your own risk.

Please feed back on how you find this info and your lease extension experiences.

Should you extend your lease?

There are two million leasehold flats in England and Wales and it's the most common form of flat ownership.

If you own a leasehold flat, you effectively rent it for a certain amount of time. You own the right to hang out there, but not the building itself. Scottish and Northern Irish leasehold laws differ.

Read more on the four main types of home ownership in England and Wales.

Who can extend?

Under the 1993 Leasehold Reform Act, most flat-owners are legally entitled to get 90 years added to their lease at a fair market price. In a nutshell …

To be legally entitled to extend, you need to have owned the flat for at least two years.

You don't need to have lived there, just owned. Though for very short leases, the price rockets.

Should you extend?

Extending a shorter lease to a decent length can add thousands to your property's marketing value. Generally, the shorter the lease, the lower the asking price.

When you extend, it's usually by 90 years.

Check how long you've got left. If your lease is under 70 years, mortgage rates may at best increase. It will be virtually unmortgageable under 60, so you will struggle to remortgage. If you want to sell, you'll probably have to flog to a cash buyer or shift at auction.

If you've more than 90 years remaining, the value added to the flat may only be a smidgen more than your costs - see potential added values in our table. (Though, of course, who knows what little things can sway people to pay more for one property than another?)

There's no urgency for those with 90 years or more left who are staying put. However, everyone – whether selling or staying – should start thinking about this once their lease gets to 83 years ish.

If your lease is ticking down to 80 years, READ ON!

We want to sear a point onto your brain. There is a magic number of years at which leases become much pricier to extend. That magic number is:

Freeholders sit around praying you let your lease drop to 80 years or less, as then they rake in the cash. This is because after that you will pay 50% of the flat's 'marriage value' on top of the the usual lease extension price. Marriage value is the amount of extra value a lease extension would add to your property.

To see how this works, play with our Lease Extension Calculator to see how much it costs to extend at 81 and 79 years.

If your lease has 83 years left, it's time to really start looking seriously into this.

If you're a flat-hunter, alarm bells should screech if a lease is nearing or below 80 years – don't just accept estate agents' promises of easy extensions.

You have to have owned the flat for two years before you can extend. A seller can get the ball rolling and pass the rights to the purchaser. But if a buyer waits until they've completed the purchase, it'll be another two years before they've a right to extend.

Typical cost to extend lease on £200,000 flat by 90 years

Lease length	Extension cost	Professional fees (1)	Total	Potential added value (2)
95 years	£5,000	£2,500	£7,500	£5,000
85 years	£6,000	£2,500	£8,500	£10,000
79 years	£8,500	£2,500	£10,500	£16,000
70 years	£14,000	£2,500	£16,500	£26,000
60 years	£24,000	£2,500	£26,500	£38,000
Typical cost to add 90 years to a lease, cost based on Leasehold Advisory Service data. Costs are per flat and can vary dramatically. Based on a £200,000 flat (£200,000 is its value with 999 year lease) with £200 annual ground rent. 1) This includes the valuation fee and freeholder's legal costs. 2) Estimates by Kinleigh Folkard & Hayward. These are typical values for straightward cases and will vary.

What if I've got a short lease?

Extending short leases is pricey – we're talking tens of thousands. If your lease is shorter than 60 years, talk to a solicitor about how much it will cost to extend (the leasehold calculators won't work below 60 years). Excellent legal advice is a must.

Some inspiration ...

Here are a few MoneySavers' experiences, though remember this won't work out for everyone. If you've extended your lease, please post your experiences, good and bad, in the Extend Your Lease discussion.

Want to ditch your freeholder too?

Leaseholders must pay ground rent (usually small) and service charges (often a fair whack) to the landlord. Frankly, some freeholders would take the pennies off a dead man's eyes, charging £10,000s extra for repairs and picking pricey insurance policies paying the most commission.

The good news is a building's flat-owners are often legally entitled to buy the freehold and take over the building's management. It's usually then easy and cheap to extend the lease to 999 years at the same time.

As a rough rule of thumb, the cost of a share of the freehold for one flat (excluding legal fees) is similar to extending a lease by 90 years (use our calculator). Alternatively, you may still have a legal right to manage your building.

So if you want more control over your building too and at least 50% of the building's flats want to take part, read our Buy Your Freehold guide.

How much will it cost?

The price depends on several variables, including the flat's value, the lease length and ground rent. It also depends on your negotiations.

This tool gives a steer, but bear in mind leasehold law is hideously complicated so costs can vary dramatically. The tool cannot calculate leases with less than 60 years to run, as there are too many variables, so ask a solicitor.

Ask other residents in the building how much their lease extensions cost, as this provides a useful guide.

Other costs to factor in

On top of the cost of the lease extension itself, you pay a few other fees:

• Legal fees
  
  You'll need to pay your legal fees, plus the freeholder's reasonable costs and valuation fees. Importantly, this does not include the freeholders' legal costs for negotiating the price or for dealing with court or Leasehold Valuation Tribunal applications.
• Valuation fees
  
  A surveyor will need to visit your home to put a figure on the lease extension. These valuations typically cost about £400 to £900, depending on your flat's value.
• Stamp duty
  
  

  Stamp duty applies to lease extensions in the same way as any other home purchase. However, this is unlikely to affect most flats, as you don't have to pay anything if the extension price is £125,000 or less. If it's more, use our Stamp Duty Calculator to see how much you'll pay.

How to pay for it

Hopefully, extending your lease will ultimately add value, but don't take out credit cards or loans to do it.

Mortgage broker London & Country says most lenders will extend a mortgage to pay for a lease extension. You'd still need enough room on the mortgage to cover it and and be able to meet the repayments though. Though lenders may be cautious if you've an extremely short lease.

Plus, remember, borrowing's cost isn't just about the rate, it's about how long it's for. The longer, the costlier – and most mortgages are over much longer periods than loans or credit cards. Do your sums with our Mortgage Calculator and see the Remortgage Guide.

Step-by-step guide to extending your lease

The lease extension process can go slower than a year in prison, so if you're thinking of selling your home, start early. Though it's worth noting that the clock stops counting once you serve the notice, so if you file at 81 years, the lease won't tick down to 80.

Just a note that in this guide, the word freeholder means the person who flat owners pay service charge to (otherwise known as the 'landlord'). Sometimes landlords pay rent to an even bigger company that owns the freehold and is legally known as the 'freeholder'. We've chosen to use the word 'freeholder' instead of landlord in all cases to avoid confusion.

Here's a quick Q&A on extending your lease. If you've further questions, please add them to the Extend Your Lease discussion.

Further help & advice

The Leasehold Advisory Service has a wealth of free advice on leasehold law, including service charges, extending your lease, buying the freehold, right to manage and applying to the Leasehold Valuation Tribunal. You can also get advice in person or by calling 020 7383 9800.

Another useful source of info is the Government's Leasehold site.

This guide will continue to develop over time. Please feed back on how you find this info and your successes and failures.