Estimated premium range
£6,500to£8,750
Plus the freeholder's reasonable valuation and legal costs, typically £1,500 to £3,000.
Indication only, not an official valuation. Not to be referred to in any substantive manner.
The method
How a lease extension premium is calculated
Under the Leasehold Reform, Housing and Urban Development Act 1993 a qualifying leaseholder can add 90 years to their lease and reduce the ground rent to a peppercorn. The price for doing so is called the premium, and it is the sum of three separate things the freeholder is being compensated for.
The ground rent
Your freeholder currently collects a ground rent and will lose it, because the extended lease is granted at a peppercorn. The premium includes the capitalised value of that income stream over the remaining term. Where a lease has a doubling or index linked review pattern this element can be far larger than the current figure suggests.
The reversion
At the end of the lease the flat reverts to the freeholder. Adding 90 years pushes that date much further into the future, so the premium compensates them for waiting longer. The shorter your remaining term, the sooner that reversion was due and the more it is worth today.
Marriage value
Extending usually creates value that did not exist before. Where the unexpired term is under 80 years, the law requires that uplift to be shared equally with the freeholder. Above 80 years it is not payable at all, which is the single largest step in the whole calculation.
Worked examples
What the same flat costs at different lease lengths
These figures all describe one flat worth £300,000 with a fixed ground rent of £200 a year. The only variable is the unexpired term. Read down the column and the shape of the cost curve becomes clear on its own.
The move from 82 years to 79 years is worth noticing. Nothing about the flat has changed, but the midpoint estimate rises by roughly half again, because the freeholder becomes entitled to a share of the marriage value. That threshold is fixed by statute and it does not move, so the practical question for most leaseholders is not whether to extend but whether they would rather do it on one side of the line or the other. Finding out where your lease actually stands costs nothing.
The honest part
What this calculator cannot tell you
A calculator works from four numbers. A valuation works from evidence. The gap between those two things is where the real premium is decided, and it is usually wider than people expect.
This tool cannot read your lease, so it does not know whether your ground rent doubles every 25 years or is linked to RPI, both of which change the answer materially. It has no settlement evidence for your building or your postcode, which is what relativity is actually argued from. It has not seen the flat, so it cannot account for condition, improvements you have made and should not be charged for, or anything unusual about the layout. And it uses conventional rates rather than the ones a freeholder surveyor is likely to argue for on your particular case.
Use the range above to understand the scale of what you are dealing with and to decide whether to take it further. When you need a figure you can rely on, whether for a formal claim or simply to know where you stand before approaching your freeholder, that is a RICS valuation.
Common questions
Questions about the calculation
From £695 · RICS Regulated
Find out what your extension actually costs
A full RICS lease extension valuation gives you a defensible figure, and we negotiate it with the freeholder surveyor on your behalf. Read more about our lease extension service.