Yes — in almost every case, the lease extension premium is open to negotiation. Whether you proceed through the formal statutory process or an informal voluntary route, there is usually scope for discussion between the leaseholder and the freeholder.
At extension.lease, our RICS-qualified surveyors have valued and negotiated thousands of lease extensions across London and the UK. We regularly act on both sides — for landlords and leaseholders — which gives us unique insight into how to position a case for the best possible outcome. Where negotiations fail, we have successfully represented clients as Expert Witnesses before the First-tier Tribunal (Property Chamber), with judges often determining premiums very close to our professional valuations.
🔑 What is the lease extension premium?
The premium is the sum you pay to your freeholder to extend your lease. It compensates them for:
- Loss of future ground rent income.
- Delay in regaining vacant possession of the flat.
- Sharing in the uplift in value created by the extension, known as marriage value (if the lease has fewer than 80 years left).
Premiums are assessed by specialist valuers using methods set out in legislation and case law.
⚖️ Can I challenge or negotiate the premium?
Yes — here’s how it works under both routes:
Formal (Statutory) Lease Extension
- You propose a premium in your Section 42 Notice.
- The freeholder serves a counter-notice with their own figure.
- Surveyors for each party negotiate to narrow the gap.
- If no agreement is reached, either party may apply to the First-tier Tribunal (Property Chamber), which has the power to set a fair premium.
Informal (Voluntary) Lease Extension
- You can approach your freeholder directly for terms.
- Premiums and conditions (such as ground rent) are entirely negotiable.
- However, the freeholder has no obligation to offer fair terms, and there is no tribunal safety net if talks break down.
📊 How are premiums valued?
Premiums depend on several variables, including:
- Market value of the flat with and without a lease extension.
- Remaining lease length (shorter leases mean higher premiums).
- Current ground rent terms.
- Relativity (the relationship between short lease and long lease values).
- Capitalisation and deferment rates used in statutory valuation.
- Marriage value, if the lease has fallen below 80 years.
Surveyors often disagree on these inputs, which creates scope for negotiation.
⚡ Factors that influence negotiation
- Lease length: Below 80 years, premiums rise sharply due to marriage value.
- Comparable evidence: Different surveyors may select different transactions to support their valuation.
- Ground rent structure: Fixed, doubling, or RPI-linked ground rents can impact premiums significantly.
- Yield assumptions: Disagreements about relativity, reversionary value, and discount rates often drive negotiation gaps.
This is why expert representation is crucial — small differences in assumptions can mean thousands of pounds in the final premium.
🚪 What if we can’t agree?
If negotiations fail under the statutory process:
- Either party may apply to the First-tier Tribunal within 6 months of the counter-notice.
- The Tribunal hears expert evidence from both sides and determines the premium.
- This process is routine and exists as a safeguard to prevent leaseholders from being overcharged.
💡 Tips for successful negotiation
- Hire a Chartered Surveyor: A professional valuation provides credibility and anchors your negotiations.
- Make a realistic opening offer: Too low, and the freeholder may dig in; too high, and you risk overpaying.
- Engage promptly: Timetables under the statutory process are strict — missed deadlines can end your claim.
- Stay flexible: Settlement is usually cheaper and quicker than going to Tribunal.
- Be prepared for Tribunal: Showing you’re willing to escalate often strengthens your negotiating position.
🤔 What about informal extensions?
While negotiation is possible informally, beware:
- Freeholders may set inflated premiums.
- Ground rent may be retained.
- Terms can be unfair, with no statutory fallback.
For these reasons, most leaseholders prefer the statutory process, which provides better protection and a Tribunal route if agreement isn’t reached.
✅ Summary: Negotiating your lease extension premium
- Yes, the premium can be negotiated — in both statutory and informal processes.
- The statutory process offers better protection, including the right to Tribunal determination.
- Skilled negotiation by an experienced surveyor can save you thousands of pounds.
At extension.lease, we:
- Provide expert lease extension valuations.
- Negotiate firmly with freeholders on your behalf.
- Represent clients at Tribunal if necessary to secure fair outcomes.
