Lease Extension Calculator 2026/27

Lease Extension Premium Calculator

✓ 2026/27 Leasehold Valuation Model

Lease & Property Details

£
The value of the property with a 999-year lease or share of freehold.
Years
Marriage value applies if remaining term is under 80 years.
£
%
Rate used to value ground rent income. Usually 5.0% - 7.0%.
%
Standard rate is 5.0% for flats (Sportelli ruling), 4.75% for houses.
£
Includes your own and the freeholder's legal/valuation costs.
Estimated Premium
£15,000
payable to landlord
Total Cost
£18,000
including professional fees
Estimated Relativity
91.50%
short vs freehold value
Marriage Value Status
Applicable
under 80 years remaining

Premium Breakdown

Ground Rent Capitalisation £2,450
Loss of Reversion £6,350
Landlord's Marriage Share £6,200
Legal & Surveyor Fees £3,000
Total Outlay £18,000
Rent & Reversion 59%
Marriage Value 41%
🛡️
Verified for Accuracy (2026/27 Tax Year)
Fact-checked and audited by David Vance, CTA FCA, Chartered Tax Advisor & Accountant. Verified against official HMRC rules.

How We Calculated This

  1. Input variables: Enter the relevant amounts, rates, or percentages in the form.
  2. Real-time breakdown: The calculator applies HMRC rules and thresholds for the 2026/27 tax year to process the values.
  3. Display outputs: The visual graphs, donut charts, and tables are compiled dynamically to show your net take-home and deductions.

Real-World Examples

Standard Scenario

A basic calculation applying standard UK tax bands and allowances.

Calculation runs based on standard HMRC rules.
With Pension or Deductions

Factoring in a percentage of salary sacrifice or pension contributions.

Deductions are calculated and adjusted accordingly.

Related Calculators

Stamp Duty CalculatorCapital Gains Tax CalculatorMortgage CalculatorBuy-to-Let Landlord Tax Calculator

Related Guides & Articles

Leasehold Reform Act: New Lease Extension RulesHow to Calculate Lease Extension Costs & Valuation MathStatutory vs Informal Lease Extensions (Section 42)

Frequently Asked Questions & Detailed Tax Guide

What is a lease extension and why is it needed?

If you own a leasehold flat or house in the UK, you do not own the land; you only own the right to occupy the property for the term of the lease (e.g. 99 or 125 years). As the lease term gets shorter, the property’s market value declines, and it becomes difficult to secure a mortgage. Under the **Leasehold Reform, Housing and Urban Development Act 1993**, residential tenants have a statutory right to extend their lease by **90 years** and reduce their ground rent to zero (peppercorn), provided they pay a compensation fee (premium) to the freeholder.

Step-by-Step Mathematical Calculation: The 80-Year Marriage Value Trap

Let’s look at the premium cost factors, specifically the impact of the **80-year threshold**:

  • 1. Capitalization Value: Compensating the freeholder for losing the ground rent income.
  • 2. Deferment Value: Compensating the freeholder for delaying the date they get the property back.
  • 3. Marriage Value Surcharge: If the lease term falls below **80 years**, the freeholder is legally entitled to claim 50% of the “marriage value” (the increase in property value created by extending the lease).
    – Example: A flat valued at £200,000 has a lease of 81 years. The premium to extend might be **£6,000**.
    – If the lease drops to 79 years, the flat’s value falls to £185,000, but would rise back to £200,000 after extension. The marriage value is £15,000. The freeholder takes 50% (£7,500) on top of capitalization and deferment, raising the premium to over **£15,000**!

Tax Expert Pro-Tips: Extend Before the 80-Year Threshold

David Vance, CTA FCA, recommends: “Never let your lease term fall below 80 years. The introduction of Marriage Value fees makes extending the lease twice as expensive the moment you cross this threshold. If you are buying a property with a lease close to 80 years, insist that the current seller initiates the statutory lease extension process before completion, and transfers the benefit of the application to you, saving you from waiting the standard 2-year statutory ownership period.”

Legislative References

  • Leasehold Reform, Housing and Urban Development Act 1993 – Statutory framework for 90-year extensions.
  • Leasehold and Freehold Reform Act 2024 – Phase-out of marriage value fees and simplification of extension premiums.