By Rebecca Rinn and Rachel Newcombe, Streathers Leasehold Enfranchisement Team
For many leaseholders, their property represents one of their most valuable assets. Yet one of the most common and costly mistakes we encounter is delaying a lease extension until the lease has fallen below the critical 80-year threshold.
Whether you own a flat in Prime Central London or an investment property, understanding how lease length impacts value is essential. The earlier you seek advice, the more options are likely to be available and the lower the cost may be.
At Streathers, our specialist Leasehold Enfranchisement team advises leaseholders, freeholders and landlords on all aspects of leasehold reform, helping clients protect and enhance the value of their property interests.
Why Is 80 Years So Important?
The 80-year mark is one of the most significant milestones in leasehold ownership currently.
Once a lease falls below 80 years, under current law leaseholders become liable to pay marriage value when extending their lease. This can significantly increase the premium payable to the freeholder.
Marriage value reflects the increase in the property’s value created by combining the leaseholder’s and freeholder’s interests when a new lease is granted. Under the current statutory regime, part of this increase in value becomes payable to the landlord.
In practical terms, crossing the 80-year threshold can mean the difference between a manageable lease extension premium and a substantially more expensive claim. For owners of high-value London properties, the additional cost can be considerable.
The Leasehold and Freehold Reform Act 2024 received Royal Assent in May 2024 and includes reforms intended to make lease extensions and enfranchisement cheaper and simpler, including the abolition of marriage value and longer statutory lease extensions. However, many of the most significant valuation reforms are not yet fully in force, so leaseholders should take advice on the current position before deciding whether to proceed now or wait.
How a Short Lease Affects Property Value
A diminishing lease can impact much more than just the cost of an extension.
Leaseholders often find that shorter leases can:
- Reduce market value
- Make the property less attractive to buyers
- Restrict mortgage availability
- Delay sales transactions
- Reduce future investment potential
Many lenders impose minimum lease requirements, meaning buyers may struggle to obtain finance as the lease term decreases.
This is why lease extensions should be viewed not simply as a legal process, but as an important investment in preserving value.
One of the biggest mistakes leaseholders make is waiting until a sale, remortgage or valuation issue forces them to take action.
If your lease is approaching 80 years, or has already fallen below that threshold, specialist advice now could save you significant time, money and stress in the future.
The earlier you act, the more options are likely to be available and the greater your ability to protect the long-term value of your property.
What Do You Get With a Statutory Lease Extension?
Qualifying leaseholders are entitled to:
- An additional 90 years added to the existing term
- A reduction of ground rent to a peppercorn (nil rent)
For many leaseholders, extending a lease provides peace of mind and protects the future value of their property.
Contact Streathers’ Leasehold Enfranchisement Team
If you would like advice on:
- Lease Extensions
- Collective Enfranchisement
- Share of Freehold Acquisitions
- Right to Manage Claims
- Absent Freeholder Applications
- First-tier Tribunal Proceedings
- Leasehold Reform
- Freehold Acquisitions
- Right of First Refusal Claims
- Residential Landlord and Tenant Matters
please contact Rebecca Rinn, Rachel Newcombe or a member of the Streathers Leasehold Enfranchisement Team.
