When you extend the length of the lease of your flat you have to pay your freeholder a fee – known as the premium.
Under the 1993 legislation, Leaseholders with fewer than 80 years remaining are hit with a significant additional charge as part of this premium. This is known as "Marriage Value". When the Leasehold and Freehold Reform Act 2024 comes into force (which could be later this year at the earliest, but might well take much longer), you will no longer required to pay this.
When you extend your lease the value of your property will go up. If your lease drops below 80 years you have to give half of the hypothetical profit to your freeholder!
If your lease is getting close to the 80 year mark: please arrange a callback with us to discuss getting your lease extended before it gets more expensive.
Is your lease already below 80 years?
The government are intending to make it cheaper for people with fewer than 80 years remaining to extend their leases.
This commitment was included in the Leasehold and Freehold Reform Act 2024, which was passed in May 2024. However, it is not yet in effect.
The Act commits to removing the Marriage Value, which is explained above. When this happens it will likely save people with leases below 80 years a significant amount of money.
If your lease is below 80 years, you need to consider waiting to extend. This article will help you decide what to do.
How much cheaper will it be to extend my lease?
We don't 100% know.
Usually Marriage Value (the thing they're talking about abolishing) is between half and 1/3 of the overall cost of extending a lease.
As a result, if your lease extension premium is currently anticipated to be say £15,000, it could be reduced by as much as £5,000 to £7,500 after this change.
It is worth noting that it won't necessarily be reduced by this amount. It is possible that the government will tweak other parts of the calculation to compensate partly and the saving will be less.
Please note: We can't give advice on how much you could save, because there are too many "what ifs".
When will these changes come into effect?
The Leasehold and Freehold Reform Act 2024 was passed in May 2024!
However, it's provisions are not yet in force and might not be for years yet. The Government have further legislation to pass before it can come into effect.
Should I extend my lease now?
We can't offer tailored advice on whether you should wait or not - this is only a decision you can make.
The following might help you make your decision:
Even once the changes have come into force, it will likely take you another year after that to get your lease extended. You need to be asking yourself "Can I wait until end of 2027/2028/2029+ for my lease to be extended?"
I need to get this done
If you want to sell or remortgage your flat, or have another reason you want to get your lease extension behind you, that that makes sense. Sometimes certainty and fitting in with other life plans is more important than holding out for the best price.
Decided to go ahead with your lease extension?
I can wait.
If you can hold on with your current lease indefinitely, then you may choose to wait. It could save you £££s.
In this case we suggest you sign up to our Newsletter, and we'll keep you updated on changes.
Have specific questions?
Join our Facebook Group to ask our expert team.
