Many leaseholders invest time and money into upgrading their flats — whether by installing a new kitchen, adding a loft conversion, or modernising a bathroom. But when it comes to extending your lease, one common concern arises: *”Will I be charged more because I improved my property?”
The answer is reassuring: no — your improvements are protected from inflating your lease extension premium, provided you take the statutory route.
This guide explains how improvements are treated during the lease extension process, how they affect the valuation, and what to do if you’ve significantly upgraded your flat.
How Are Lease Extension Premiums Calculated?
The lease extension premium is based on:
- The flat’s market value without the lease extension
- The flat’s market value with the lease extension
- The length of the remaining lease
- The ground rent provisions
- Whether marriage value applies (for leases under 80 years)
The difference in value between the short and extended lease is the foundation of the premium — but if the flat has been improved, those improvements are excluded from the uplift.
Statutory Lease Extensions and Excluding Improvements
Under the Leasehold Reform, Housing and Urban Development Act 1993, when a leaseholder has improved their property:
- The value added by the improvements is disregarded in the lease extension calculation
- The valuer will assess the flat’s market value as if the improvements were not made
This ensures leaseholders aren’t penalised for adding value to their own home.
What Counts as an Improvement?
The law defines improvements broadly. Common examples include:
- Installing a new or upgraded kitchen
- Adding or renovating a bathroom
- Loft conversions or extensions
- Reconfiguring the internal layout
- Replacing flooring, windows, or insulation
Essential repairs or replacements (like fixing damp or upgrading electrics) don’t count as improvements for valuation purposes, but cosmetic and structural upgrades do. This is because your lease has repair and maintenance obligations which you must adhere to.
How Do Valuers Handle Improvements?
When Extension.Lease conducts a valuation:
- We assess the market value of your flat with the improvements
- We then estimate what the flat would be worth without those improvements
- The difference is excluded from the premium calculation
This process ensures your investment doesn’t increase what you pay the freeholder.
Example:
- Flat with 78-year lease: £300,000 (includes £20,000 of improvements)
- Estimated unimproved value: £280,000
- Valuation for premium is based on: £280,000
What If My Improvements Are Difficult to Separate?
Sometimes, it’s challenging to value the flat without improvements — especially if they’re older or integrated.
In these cases, our surveyors use comparable property sales (similar flats in the building or area that haven’t been improved) to benchmark the unimproved value.
We may also:
- Ask for cost breakdowns of works
- Review planning permissions
- Inspect layout changes
This process ensures fairness and compliance with RICS standards.
What About Informal Lease Extensions?
Be cautious — informal lease extensions are not legally required to disregard improvements.
Some freeholders may:
- Base the premium on your flat’s full enhanced value
- Refuse to acknowledge the statutory exclusion of improvements
- Offer worse terms (e.g. retained ground rent, shorter extension)
Always opt for the statutory route if you’ve made significant upgrades.
FAQs
Will my improvements always be excluded?
Yes — if you extend under the statutory route. This is a protected legal right.
Do I need to provide evidence of the works?
It helps — planning documents, invoices, and photos can support your surveyor’s assessment.
What if the improvements were done by a previous owner?
They still count as improvements and should be disregarded. The key is that they weren’t originally part of the lease.
Will this reduce the premium a lot?
It can — especially if the upgrades are extensive or high quality. Even small adjustments can save you thousands.
Summary: Improvements and Lease Extensions
| Scenario | Impact on Premium |
| New kitchen or bathroom | ✅ Excluded from valuation |
| Loft conversion | ✅ Excluded from valuation |
| Repairs (e.g. damp, rewiring) | ❌ Not excluded |
| Informal lease extension | ⚠️ Improvements may be included |
Get a Fair Valuation That Respects Your Improvements
At Extension.Lease, we specialise in lease extension valuations that fairly reflect your upgrades without overcharging you. We:
- Identify and exclude improvements
- Provide reasoned valuations
- Negotiate firmly with freeholders
