Leasehold Extension Premium Calculator UK 2026

Our Leasehold Extension Premium Calculator estimates the one-off sum payable to a freeholder when extending the lease on a flat, using an illustrative RICS-style valuation approach based on term value, reversion value and, where relevant, marriage value. This is different from ground rent, which is an ongoing annual payment — use our Ground Rent Calculator for that. This tool covers leasehold flats only; leasehold houses follow a different statutory regime under the Leasehold Reform Act 1967.

Premium vs Ground Rent: What’s the Difference?

The premium is a one-off capital sum paid to the freeholder to add years to your lease term. Ground rent is a separate, recurring annual charge you pay under the terms of your existing lease, regardless of whether you extend. Extending your lease under the statutory process (see below) typically reduces your ground rent to a peppercorn (effectively nil) for the remainder of the term, on top of adding 90 years.

The Statutory Lease Extension Route

Leaseholders of flats who qualify have a statutory right under the Leasehold Reform, Housing and Urban Development Act 1993 to a lease extension of:

There is no longer a two-year ownership requirement for qualifying statutory lease extensions. The two-year qualifying period was removed on 31 January 2025. Other eligibility conditions may still apply.

• 90 years added to the existing unexpired term
• Ground rent reduced to a peppercorn (nil) for the whole of the new term
• The right to negotiate, and if necessary refer disputed valuations to the First-tier Tribunal (Property Chamber)

This is the default basis this calculator uses unless you switch to an informal extension.

How the Premium Is Calculated

This calculator’s premium estimate is built from three components, following an illustrative RICS-style approach based on the method used in tribunal and negotiated valuations:

1. Term value — the present value of the ground rent income the freeholder gives up over the remaining lease term, discounted at a capitalisation rate (typically 6–8%).
2. Reversion value — the present value of the freeholder’s right to regain vacant possession at the end of the lease, discounted at a deferment rate. The Sportelli starting rate for flats is 5%, although valuers may consider whether the evidence supports a different rate in an individual case.
3. Marriage value — only applies when the unexpired term is 80 years or less. It represents the extra value created by combining the freeholder’s and leaseholder’s interests, and is split 50/50 between the two parties.

The premium equals the diminution in the value of the freeholder’s interest (term value plus reversion value, before the extension, minus the freeholder’s interest after) plus the leaseholder’s 50% share of marriage value, where it applies.

Why 80 Years Is a Critical Threshold

Once your unexpired lease term reaches 80 years or less, marriage value is added to the premium calculation, and it is frequently the single largest component on a short lease. Extending before your lease reaches 80 years or less, where practical, typically avoids this extra cost. Leases under roughly 60–70 years can also be harder to mortgage, which is a separate practical reason to extend sooner.

Understanding Relativity

Relativity is the value of a short lease expressed as a percentage of the value of a long lease (90+ years) on the same property. A 99-year lease might be worth close to 100% of the long-lease value; a 40-year lease might be worth under half. Relativity tends to fall faster as the lease approaches, and then drops below, 80 years. Published relativity graphs vary between valuation firms and are a frequent point of dispute in tribunal cases — the figures in this calculator are indicative only, drawn from commonly cited published curves, and should not be relied on for an actual transaction.

Statutory vs Informal Extensions

Typical Costs Beyond the Premium

In addition to the premium, statutory lease extensions typically involve:

• Your own valuer’s fee — usually a few hundred to low thousands of pounds, depending on value and complexity
• Your own solicitor’s fee — typically £800–£1,500+
• The freeholder’s reasonable valuation and legal costs — which you are required to pay under the statutory process, typically another £1,000–£2,500+

These are not included in the premium estimate above and vary by case, property value and whether the matter proceeds to tribunal.

Where Leasehold Reform Stands in 2026

The Leasehold and Freehold Reform Act 2024 received Royal Assent in May 2024 and includes provisions to abolish marriage value, extend the standard statutory term to 990 years, and remove the two-year ownership requirement. As of September 2026, only a small number of provisions are in force — including removal of the two-year ownership rule. The valuation changes, including the abolition of marriage value, remain uncommenced and await secondary legislation setting the new prescribed rates. This calculator reflects the current law as it actually operates today (marriage value still applies at 80 years or less, statutory extensions still add 90 years). Always check the current commencement position before relying on figures for a live transaction, as the law in this area is actively changing.

Frequently Asked Questions