The Statutory Leasehold Extension Process & Costs

If you own a leasehold property in England and Wales, extending the number of years on your lease is one of the most important steps you can take to protect its value. With each year that goes by, the value of your flat decreases; slowly at first if you have a long lease, but much faster if you are close to or under 80 years.

Whilst the Leasehold and Freehold Reform Act 2024 was passed, much of the necessary secondary legislation has stalled. This means that although certain parts of the Act are active, the marriage value and the traditional statutory leasehold extension process remain firmly in place, keeping the procedure both complex and costly.

For a statutory leasehold extension, the total professional costs, including your solicitor, a RICS valuer, and the freeholder's reasonable fees, typically fall between £3,600 and £6,598. This does not include the premium (the actual price of the lease extension itself), which is calculated based on buying an additional 90 years from your freeholder to add to your existing lease.

This comprehensive guide strips away the legal jargon. It walks you through the formal leasehold extension process step by step, breaks down exactly how much it will cost, and explains the recent changes introduced by leasehold extension reform.

Need further help? For more information on other types of lease extensions, including guides on informal lease extensions and dealing with an absent freeholder, visit our comprehensive guide to leasehold extensions.

The Statutory Leasehold Extension Process (Steps 1 to 4)

The formal statutory route guarantees your right to extend. Here is exactly how the process unfolds:

Step 1: Check your eligibility

To be eligible, your lease must have been granted as a long lease (originally over 21 years); this is easy to check as you can look at Section A on your office copy title deeds, and it confirms the original lease term.

As the two-year ownership rule has been abolished, you can begin the process from the day you complete your property purchase. You are generally not eligible if your landlord is a charitable housing trust, the Crown Estate, or the National Trust.

Step 2: Value the Premium

Before contacting your freeholder, you need to know exactly how much it should cost to buy the additional 90 years you are adding to your lease. The premium compensates the freeholder for their lost ground rent and the delay in eventually regaining possession of the property. This is why if your ground rent is high or your remaining lease term is short, the premium you need to pay will increase. This is why a lease extension in London will cost more, as the ground rents are higher there.

You will need a specialist RICS leasehold surveyor to provide a leasehold extension valuation. This provides the legally sound figure that will form the basis of your formal offer. If the freeholder counters with a sky-high demand, you can negotiate confidently knowing your offer is anchored in a professional RICS surveyor's opinion.

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Stage 3: Serve the Section 42 Notice and Negotiate

You will need a specialist leasehold solicitor to draft and serve a Section 42 Tenant's Notice on the freeholder. The notice includes the terms of your offer, primarily what you offer to pay for the additional 90 years.

The freeholder has until the date in the notice to respond with their counter notice. The deadline must be at least 2 months. The freeholder's Section 45 Counter-Notice will confirm:

• whether you are eligle to extend;
• formalities such as third-party managing agents, superior landlords and addresses for service.
• the freeholder's solicitor and surveyor costs that you are liable for, and you must pay your solicitor these costs to be held on account; and
• the premium they will accept, and be prepared for this to be higher.

If the premium is higher, you can either choose to accept, as the increase isn't worth paying to negotiate, or negotiate. This is where you'll instruct your own surveyor to negotiate directly with the freeholder's valuer to find a fair compromise.

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Step 4: Completion and Registration

Once the premium is agreed, the freeholder's solicitor drafts a deed of variation that varies the lease term, ground rent and includes/amends the statutory clauses.

The final step follows this process:

• Your solicitor reviews the deed.
• You sign and have your signature witnessed.
• (if required) Your solicitor drafts a Deed of Substituted Security for your mortgage lender.
• You pay your premium to your solicitor.
• Your solicitor sends the premium funds to the freeholder, dates the deeds, and you have formally completed.
• Your solicitor submits the deeds to the Land Registry and handles any requisitions they may have.

How much does a leasehold extension cost?

When calculating the overall cost of a statutory lease extension, you need to budget for two distinct figures: the lease extension premium (the price paid directly to the landlord to buy the additional 90 years) and the professional legal and valuation fees. Under Section 60 of the Leasehold Reform, Housing and Urban Development Act 1993, you are legally responsible for paying both your own professional fees and the freeholder’s reasonable costs.

Excluding the premium itself, the total professional legal and valuation costs typically range between £3,600 and £6,598 (inc. VAT). Breaking this down into itemised stages:

1. Your RICS Leasehold Extension Valuation: £600 to £899

Before serving formal notice, you must instruct an independent RICS chartered surveyor specialising in leasehold enfranchisement. They inspect the flat and establish the statutory premium range, both the opening offer figure and the realistic settlement target. This valuation provides the evidential backing required to defend your offer under statutory rules.

2. Freeholder's Valuation Fee: £600 to £899

Once your formal claim is served, the freeholder is entitled to instruct their own surveyor to assess the property and counter your offer. You are legally required to reimburse the landlord for this valuation fee, provided it is reasonable and reflects prevailing market surveying rates.

3. Serving the Section 42 Notice: £600 to £1,200

Your solicitor drafts and formally serves the Section 42 Tenant’s Notice on the freeholder and any intermediate landlords. This notice establishes the legal 'valuation date' and locks in statutory deadlines. Any procedural errors can render the notice invalid, which forfeits your costs and bars you from reapplying for 12 months.

4. Your Solicitor's Conveyancing Legal Fees: £600 to £1,200

Once the premium and terms are agreed, your solicitor manages the formal conveyancing stages: reviewing and drafting the Deed of Variation or new lease, securing your mortgage lender's formal consent, coordinating legal execution, remitting completion funds, and updating the title at HM Land Registry.

5. Freeholder's Solicitor Legal Fees: £600 to £1,200

You must pay the reasonable legal costs incurred by the freeholder’s solicitor to review your Section 42 claim, investigate your title, draft the lease documentation, and execute the final deeds. However, you are strictly not liable for any legal costs the freeholder incurs whilst negotiating the premium or arguing terms at a tribunal.

6. Surveyor Negotiations: £150 to £200 per hour

If the landlord’s Section 45 Counter-Notice demands an inflated premium, your RICS surveyor negotiates directly with the landlord’s surveyor to reach a compromise. Straightforward negotiations often settle within 2 to 4 hours of professional time, but complex arguments over high ground rents or low unexpired terms will increase this cost.

7. Completion Costs and Disbursements

• HM Land Registry Registration Fees: Between £45 and £150 to formally update the register and extend the lease term on the official title deeds.
• Stamp Duty Land Tax (SDLT): Most lease extensions fall below the standard residential SDLT threshold, but tax may become payable if the agreed premium exceeds statutory thresholds or the property is an additional home or buy-to-let.
• Disbursements: £50 inc. VAT bank transfer fee, £20 per name for an online ID check, and £10 per Land Registry document.

Understanding the Lease Extension Premium

The premium is the lump sum you pay the freeholder to buy extra time on your lease. It is calculated based on three factors:

• Reversion: The value the freeholder loses by not getting the property back at the original lease expiry date.
• Ground Rent: Compensation for the ground rent payments the freeholder will lose (as a formal extension reduces your ground rent to zero).
• Marriage Value: This applies when the lease drops below 80 years. It represents the sudden increase in the property's value upon lease extension. Under current rules, you must pay half of this uplift directly to the freeholder, making extensions of less than 80 years significantly more expensive.

When do you pay the costs?

The costs you pay to extend your lease are spread out throughout the process:

• Day 1 - RICS Valuation: Your first expense will be paying for your RICS valuation.
• Day 7 - Your Solicitor: Once you get your valuation back, and you have confirmed you can finance the extension, either savings, a gift or a remortgage, you can then instruct your solicitor, where you'll pay an instruction deposit as part of their fees of circa £320.
• Day 21 - S42 Notice: It takes a couple of weeks to draft a Section 42 Notice and then you'll need to pay the balance of your solicitor's fee for this stage, disbursements such as ID and office copy title documents, and potentially a deposit of £250 or 10% of the proposed premium (whichever is greater); this is held in your solicitor's account and not released until completion.
• After S45 Counter-Notice: You pay your solicitor the feeholder's legal and surveyor costs as set out in the counter-notice.
• Negotiation: You pay your surveyor to negotiate the premium.
• Completion: You pay the balance of your solicitor's fees, premium, and any other disbursements.

First-tier Tribunal: Deadlines, Disputes, and Disagreements

If you and your freeholder cannot agree on the premium or terms in the Section 45 Counter-Notice, the dispute is escalated to the First-tier Tribunal (Property Chamber). While the idea of a tribunal sounds daunting, fewer than 1% of lease extension claims ever reach a contested hearing. In practice, lodging an application is primarily a protective legal manoeuvre to prevent your claim from lapsing while surveyors continue negotiating.

What if the freeholder rejects your offer?

Freeholders almost always reject the initial premium proposed in a Section 42 Notice. Once the freeholder serves their Section 45 Counter-Notice proposing a higher figure, a statutory two-month negotiation window opens. During this period, your RICS surveyor and the freeholder’s surveyor will review comparable sales data to bridge the gap.

If an agreement cannot be reached within those initial two months, you enter a four-month window in which you must lodge an application with the Tribunal to determine the premium and lease terms.

Statutory Timeframes and Deadlines

• Section 45 Counter-Notice: The freeholder must serve their counter-notice on or before the date specified in your Section 42 Notice (giving them a minimum of two months from service).
• Initial Negotiation Period: Both parties have two months from the date of the Section 45 Counter-Notice to negotiate terms amicably before a tribunal application can be submitted.
• Tribunal Application Window: If terms remain unagreed after the initial two months, an application to the First-tier Tribunal must be made within the subsequent four months (meaning no later than six months from the counter-notice date).
• Completion Window After Terms Are Agreed: Once terms are finalised (either through negotiation or a Tribunal determination), the parties have four months to complete the transaction. If the freeholder stalls, neither party can apply to the county court during the first two months (the 'Appropriate Period'), but an application for an enforcement order should be made in the third month. An enforcement order cannot be requested after four months have elapsed.

Tribunal Costs and Fee Rules

The tribunal application fee is £110, with a hearing fee of £220 if the matter proceeds to a formal sitting. Unlike standard civil litigation where the losing party pays the winner's legal costs, the First-tier Tribunal is predominantly a 'no-costs' jurisdiction. Under Rule 13 of the Tribunal Procedure Rules, each party is responsible for their own legal and surveyor representation fees, unless one party has acted with unreasonable or vexatious conduct.

Because preparing expert witness bundles and attending hearings adds thousands of pounds in professional representation fees with no prospect of recovering them from the freeholder, both parties face a strong financial incentive to finalise terms long before the hearing date.

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We specialise in lease extensions and have RICS valuers for the premium/negotiation and solicitors for the section 42 notice and formal or informal extension. Request a tailored quote for:

• RICS Lease Extension Valuation or L2 Homebuyers Survey.
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• Application to Tribunal to determine the premium.
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