Leasehold valuation (lease extension and enfranchisement)
Leasehold valuations: what a lease extension premium is actually built from
Lease extension and freehold purchase valuations explained: what a premium is based on, where the law differs, and when a Red Book valuer is required.
Last reviewed 31 August 2026
How is a lease extension premium worked out?
A leasehold valuation estimates the premium payable to extend a lease or buy the freehold. The calculation reflects the ground rent income lost by the landlord, the reversionary value of the property, and — where the unexpired term is short — marriage value. Because the figure is negotiated between two valuers, the valuation is advice for a negotiation rather than a single fixed answer.
At a glance
- The driver
- Unexpired lease term. Value falls, and premiums rise, as the term shortens.
- Who values
- A valuation for a statutory claim should be prepared by an appropriately qualified RICS Registered Valuer.
- Legal advice
- Eligibility, notices and deadlines are legal questions for a solicitor experienced in leasehold work.
- Jurisdiction
- Leasehold enfranchisement law is not uniform across the UK — see the jurisdiction note below.
Why the unexpired term dominates everything
A lease is a wasting asset. As the unexpired term shortens, the flat is worth progressively less than the equivalent long-lease or freehold property, and the premium required to put the term back rises.
Lenders also become more cautious as terms shorten, which affects saleability as well as value. That is why the practical advice is almost always to deal with a shortening lease earlier rather than at the point of sale.
The components of a premium
Three elements usually make up the figure: the capitalised value of the ground rent the landlord gives up, the present value of the reversion — the landlord's right to get the property back at the end of the term — and, where applicable, marriage value, which is the uplift in value created by joining the leasehold and freehold interests.
Each element depends on assumptions: capitalisation and deferment rates, relativity, and the value of the flat with a long lease. Two competent valuers can reach different figures from the same facts, which is exactly why the process is a negotiation.
Informal agreement versus a statutory claim
A landlord may offer an extension by agreement, on any terms they choose. A statutory claim follows a defined procedure with defined rights, deadlines and consequences.
The two routes can produce very different outcomes on term, ground rent and cost. This is a legal decision, taken with a solicitor, and the valuation supports whichever route is chosen.
Where a valuation is not the right instruction
A leasehold valuation is not a condition survey. If you are buying the flat as well as dealing with the lease, condition is a separate instruction — commonly a Level 2 survey for a conventional flat.
Service charge disputes, major works consultation and building safety questions are also separate matters, and cladding or external wall questions have their own process.
Who this is for
A good fit if
- Flat owners considering a lease extension
- Groups of leaseholders exploring buying the freehold together
- Buyers negotiating a price where the lease is short
- Landlords who need their own valuation advice in a claim
Not the right choice if
- Legal eligibility, notices and deadlines — instruct a solicitor
- Condition and defects in the flat — instruct a survey
- Service charge or major works disputes, which follow their own process
Valuation instructions
RICS valuation report
A formal valuation prepared by an appropriately qualified registered valuer.
Read moreShared ownership valuation
Staircasing and resale valuations under the terms of the lease.
Read moreMatrimonial valuation
Independent valuation evidence for proceedings, with the duties that carries.
Read moreIf you are also buying the flat
Getting a lease extension moving
Order matters here — the legal position is set before the number is negotiated.
1.Check the unexpired term on your lease
Read it from the lease and the title, not from memory or the agent's particulars.
2.Take legal advice on the route and your eligibility
Qualification criteria and procedure are legal questions. LEASE publishes free general guidance.
3.Instruct a valuation for the claim
A formal valuation must be prepared by an appropriately qualified RICS Registered Valuer.
RICS valuation report4.Expect a negotiation, and budget for both sides' costs
Statutory claims carry cost consequences. Your solicitor will explain which of the landlord's costs are recoverable.
Where you are matters
Leasehold enfranchisement and lease extension rights in England and Wales are governed by their own statutory framework, and reforms in this area are implemented in stages. Confirm the position that applies on the date of your claim with your solicitor.
Scotland's system of land tenure is different again; long residential leasehold of the kind found in England and Wales is not the normal tenure for flats there. Northern Ireland has its own separate legislation on ground rents and lease extension.
Nothing on this page should be read as applying England-only procedure to a property in Scotland or Northern Ireland.
When to bring in a specialist
- Eligibility, notices, deadlines and cost liability — a solicitor experienced in leasehold work
- Free general guidance on leasehold rights — the Leasehold Advisory Service (LEASE)
- Tax treatment of a premium or a freehold purchase — an accountant or tax adviser
- External wall and building safety questions on a block — the appropriate fire and building safety professionals
Common questions
Limitations and sources
- A valuation is an opinion prepared for a stated purpose on a stated date. It is not a guaranteed settlement figure and the negotiated outcome may differ.
- General information on this page is not legal advice, and eligibility and procedure must be confirmed by a solicitor.
- No statement here should be taken as confirming any individual's registered valuer status; that is verified in the trusted-data layer and stated on the engagement.
Source: LEASE · checked August 2026
Source: RICS · checked August 2026
Source: UK Government · checked August 2026
Last reviewed 31 August 2026.
Where to go next
- other valuation purposes — Probate, matrimonial, insurance reinstatement and tax valuations have different bases.
- condition advice on the flat itself — A valuation says nothing about repairs, and buyers usually need both.
- guidance before you commit — Plain-English explanations of the steps involved in property decisions.
Ask KJ about a lease
Tell KJ the unexpired term, the ground rent and the property, and KJ can explain the valuation route and what to instruct first.
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