Let’s look at leaseholds: Landmark legal challenge could spell big change

More than two million households in England and Wales could see costs slashed for extending leaseholds and buying freeholds, as a case comes to the court of appeal challenging a lease extension calculation of one of the UK’s richest men.

A flat in Chelsea, which is part of the multi-million pound Sloane Stanley Estate, has been the subject of a long-running legal battle surrounding the calculation of the cost of extending the lease, which has less than 23 years remaining.

Surveyor James Wyatt, who owns Parthenia Valuation, is challenging the way the lease is valued, and believes that the models used to work out lease extension costs in general are unfair and grant too much money to the freeholder.

He said: “In 1996 the Grosvenor estate commissioned [the surveying firms] Gerald Eve and John D Wood to draw up graphs of relativity to set the price for lease extensions and buying freeholds. No one has had the time, effort or money to challenge them since. It’s a much bigger scandal than the ground rents issue, and a real David and Goliath battle.”

The case, which goes to the court of appeal tomorrow, if successful could see the cost of extending a lease or buying a freehold cut significantly, which would have positive repercussions for swathes of leaseholders – although large, wealthy freeholders would be set to lose out.

A breakdown of leasehold and freehold

Generally, houses are bought on a freehold basis – meaning you own the building as well as the ground it sits on, with no time limit or extra charges applied. By contrast, flats and apartments are often, though not always, bought on a leasehold basis. This effectively means you don’t own the building, but have bought the right to live there for the full length of the term of the lease, often subject to service charges and ground rent payable to the freeholder who owns the building.

Lease lengths vary, but 90-year and 120-year leases are common, and they can even be as long as 999 years. On buying the property, the leaseholder will often have to agree to a number of terms, including clauses such as not being allowed to own pets or make any major changes to the property without permission. A breach of these rules could invalidate the lease.

As the lease term decreases, the value of the property diminishes too, as when the lease expires the home becomes the property of the freeholder automatically. Often, lenders will not provide mortgages for any leasehold property whose lease is 80 years or below, so owners can struggle to sell and therefore be forced to accept a much lower price for the property.

Extending the lease

Because the length of the lease directly influences the value of the property, many leaseholders will think about extending when it gets below a certain level – generally anything around or just above the 80-year mark. Legally in the case of flats, the freeholder must allow the leaseholder to apply to extend the lease by an additional 90 years on the existing term once they have owned it for two years.

However, at present, it doesn’t come cheap. If there are less than 80 years left on the lease, the freeholder is entitled to receive the half of the “marriage value” of the home, which is the increase in value achieved as a result of extending the lease – and on top of this the leaseholder must pay the cost of the extension.

The total cost varies depending on the value of the property and the number of years left on the lease, but Money Saving Expert demonstrates that for a £200,000 flat, extending the lease by 90 years when there are only 70 years remaining would incur a lease extension fee of around £14,000, plus £2,500 in professional fees – as well as around £13,000 for the “marriage fee” based on an estimated property value increase of £26,000.

In December last year, the Department for Communities and Local Government (now also in charge of housing) said it would be “working with the Law Commission to make the process of purchasing a freehold or extending a lease much easier, faster and cheaper”.

Jo Darbyshire of the National Leasehold Campaign added: “Over the last 12 months the National Leasehold Campaign has been pushing for reform to leasehold law and an end to the leasehold scandal. It’s time to see if the establishment are ready to listen to a logical, balanced argument and level the playing field for leaseholders.”

Self-certified Sophisticated Investor

Please read

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:

I am a self-certified sophisticated investor because at least one of the following applies:

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me seek advice from someone who specialises in advising on non-mainstream pooled investments.

High Net Worth Investor

Please read

I make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me:


Sign up for first access to new developments and exclusive property investment opportunities.

We send limited and targeted emails on new launches and exclusive deals which best fit your areas. We are trusted by over 30,000 active buyers as their source for new stock.

  • New property developments
  • Professional market reports
  • Property deal alerts
  • Development updates
Manchester property investment


Receive trending news straight to your inbox and stay up to date on all of the property market trends and advice.

Established since 2005 we are a leading voice of authority and commentary on the UK property market. Our news is trusted by Apple News & Google News.

  • UK housing market
  • Mortgage & money
  • Buy-to-let landlords
  • Guides & advice

Talk to us

Speak to our UK property experts today:


+44 (0) 333 123 0320

Open from 9am-6pm GMT


+852 6699 9008

Open from 9am-6pm HKT