Blog | Valuation | Residential Property

If the lease of your property is nearly down to 80 years, act now to preserve the value

Once the lease of your flat falls below 80 years, even by a day, the cost of a lease extension will increase exponentially, as marriage value is then payable. So act now to preserve the value of your property, says Allsop’s Emily Norman.

All high value central London properties need care and attention to keep their value. But with leaseholds, that attention includes not only maintenance but also looking after the lease. You may well be inadvertently reducing the value of your property – just by doing nothing.

If you’ve let your lease’s expiry term approach 80 years or drop below 80 years – even by just one day – your flat may be worth much less than you think. And you can’t even assume it will go up in value when the market rises.

Why it matters

Perhaps you don’t want the expense of extending the lease, especially when you’re already getting a steady rental income from the property or are enjoying living in it.

Or maybe you intend to sell soon. Or perhaps you intend to keep the property for the rest of your life and bequeath it in your will. All these factors may deter you from extending the lease or make you think it’s not your problem.

However, a flat with a lease length of close to 80 years or under will continue to lose value as the lease shortens, particularly in a static or falling market. And this has serious knock-on effects. 

Difficulties of selling medium or short term leases

A property with a lease of less than 80 years will be harder to sell. Many potential buyers will not wish to incur the costs and uncertainties associated with extending your lease. And mortgage lenders are reluctant to fund properties with shorter leases, especially those with less than about 70 years unexpired.

Act sooner not later

It may make sound financial sense to extend your lease as soon as possible, as an extension will cost more when the lease length falls below 80 years.  This is because lease extension legislation has two different formulas for calculating the price to be paid.  A comparatively benign formula applies if the lease still has over 80 years unexpired. However once the lease has fallen below 80 years, a more aggressive formula (including marriage value) has to be applied and the price that has to be paid is very much greater.

Additionally, the later you leave it after the 80-year watershed, the greater the cost of a lease extension.

Comparison of before and after 80 years

A good way to see the impact of marriage value on the cost of a lease extension is to compare prices either side of the 80-year watershed.

Assuming a flat is valued at £1.75 million on a long lease and has a current unexpired term of 79.9 years it will cost approximately £75,000 to extend the lease plus valuation and legal fees because marriage value is payable.

Meanwhile a leaseholder of the same flat whose lease has been extended 3 months earlier and therefore has an expiry term of over 80 years pays only a premium of approximately £35,000 plus valuation and legal fees, and thereby saves approximately £40,000, as marriage value is not payable.

Add value to your property

Even if you’ve let your lease fall below 80 years, it makes sense to extend it as the cost of the lease extension will increase exponentially over time.

Even in a falling market, it can still make financial sense to extend the lease as an extension will preserve a property’s value.

Who’s most affected?

Many flats built in the 60s, 70s, 80s and 90s were sold with leases of 99 years or less – the norm back then – and so are now well within, or entering, the period when marriage value is payable. If your flat was built then, you may want to double-check your lease length.

Know your rights

You have to satisfy only two criteria to be able to extend your lease. You need to have owned the property for more than 2 years and the original lease term needs have been longer than 21 years.  Or if you are purchasing a flat it is possible for the vendor to serve a formal notice on the landlord, and then transfer the benefit of the claim to yourself and then you can proceed with the lease extension rather than waiting two years.

By law, you’re entitled to a 90-year lease extension on top of your current term, but your freeholder may agree to a different term. Additionally your ground rent is reduced to nil.

How to extend

The process of extending your lease can take approximately 6-12 months.

Begin by asking a specialist valuation surveyor to estimate the cost of extending the lease.

Next a specialist solicitor serves a statutory notice on your freeholder, setting out the amount you are willing to pay for the lease extension and giving a date by which the other party must respond by way of a counter-notice.

Remember, as a leaseholder, you have to pay the freeholder’s valuation and legal costs, as well as your own.

Checking and negotiating

Once the counter-notice is received, you will need to check with your valuation surveyor that the freeholder’s cost of extension is reasonable. If there’s a dispute, your valuation surveyor will negotiate on your behalf. If no compromise with the freeholder is reached, the dispute is resolved at a tribunal.


Emily Norman, Senior Surveyor, Residential Valuation

Emily provides valuation advice to landlords and tenants including lease extension and freehold purchases. She also values individual houses and flats, residential portfolios and development sites.

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