Lease Extensions in Prime Central London: Estates, Rates and Premiums

Mayfair, Belgravia, Chelsea and Marylebone flats are valued under the same Act as any other, but at £1.5 million to £5 million the details of deferment, relativity and marriage value are worth tens of thousands of pounds.

What Counts as Prime Central London

Prime Central London (PCL) is a valuation term, not a legal boundary. It is used for the small group of central areas, such as Mayfair, Belgravia, Knightsbridge, Chelsea and Marylebone, where values per square foot are far above the rest of the capital and a long tail of leases are held on large landed estates. Several of those estates are well-known freeholders: Grosvenor (Mayfair and Belgravia), Cadogan (Chelsea and Knightsbridge), Howard de Walden (Marylebone), Portman (Marylebone) and the Crown Estate (including Regent Street, St James’s and Regent’s Park). Your freeholder is named on your Land Registry title, so check it rather than assuming.

The law does not change when you cross into PCL. A flat lease is extended under the same 1993 Act, with the same 90-year addition, peppercorn ground rent afterwards and 50% marriage value when 80 years or fewer remain. What changes is the arithmetic: the same percentages applied to values of £1.5 million to £5 million or more produce premiums that are many times higher, so small differences in valuation assumptions are worth a lot of money.

Sportelli and the PCL Deferment Rate

The deferment rate converts the freeholder’s right to get the flat back in the future into a value today. In Earl Cadogan v Sportelli [2007] EWCA Civ 1042 the courts settled 5% for flats and 4.75% for houses in PCL. The Court of Appeal stressed that Sportelli concerned PCL and that outside it the tribunal’s rate is a starting point that depends on the evidence. A later Upper Tribunal decision, Llangewydd Court Ground Rent Estate v Ralph [2021] UKUT 251 (LC), proceeded on the footing that a 5% rate used outside PCL already included a 0.25% addition for lower growth, following Zuckerman v Calthorpe Estates.

For flats, which is what a lease extension under the 1993 Act concerns, the 5% rate means the same figure applies in Mayfair and in Manchester. That is why our calculators use 5% for every flat. The 2024 Act provides for the government to prescribe valuation rates, and a consultation on proposed rates was due to close on 21 October 2026, but nothing has been prescribed in force yet.

Why the Numbers Get Large Quickly

A lease extension premium has three parts: capitalised ground rent, the reversion (the value of the freeholder’s interest after the lease), and marriage value. At PCL values the second and third dominate. The table applies the same method as our calculator to flats at three PCL values with a £250 ground rent.

Estimates before fees. These use one published relativity set and a 5% rate; a valuer will test them against local evidence.

Look at the step between 80 and 85 years: for a £2.5 million flat the premium drops from about £127,000 to about £44,000. At 80 years the premium splits roughly into £4,899 capitalised ground rent, £49,818 reversion and £72,617 marriage value. Marriage value is more than half the price, which is why timing your notice matters so much at these values. The marriage value calculator isolates that figure.

Relativity: Where Valuers Disagree

The other major input is relativity: the value of the existing short lease expressed as a percentage of the freehold value. There is no single official table, and valuers use different graphs, with disputes common. Our tools use a published set interpolated by the year (see relativity tables), and no single graph is binding on a tribunal.

This matters because the sensitivity grows with value. For a flat worth £2.5 million, one percentage point of relativity is £25,000 of value. Because the freeholder is entitled to 50% of the marriage value, a one-point change in the relativity of the existing lease moves the premium by roughly £12,500, other things equal. Two reasonable valuers who differ by three points have an £37,500 gap before any argument over the freehold value or the deferment rate.

Dealing With a Large Estate Freeholder

The statutory process is the same for every freeholder, but practical reality differs from a small private landlord. This is general commentary, not a description of any particular estate’s policy:

• Valuation evidence. Large estates handle many extensions and often hold detailed settlement evidence. A valuer who has acted against the same estate before can be an advantage, so ask about that experience when you choose one.
• Fixing the valuation date. A section 42 notice fixes the premium date. At these values, serving before a lease drops to 80 years can save six figures. Our section 42 guide explains how.
• Informal offers. Some freeholders will quote a figure without a notice. That can be convenient but is not binding on the statutory formula, so compare any quote with an independent valuation.
• Houses. Houses fall under the Leasehold Reform Act 1967 rather than the 1993 Act, and a 4.75% PCL rate applies in valuations. Estate management schemes on some estates also affect what you can do with the property.
• Costs. Under section 60 you generally pay the freeholder’s reasonable valuation and legal costs as well as your own, and at PCL values both sets of professional fees rise. See solicitor fees.

Reform Does Not Change This Yet

The Leasehold and Freehold Reform Act 2024 provides for marriage value to be abolished and for 990-year extensions at a prescribed cost, which would cut PCL premiums sharply. Neither provision is in force and no commencement date is confirmed, so premiums are still calculated the current way. If you are close to the 80-year line, waiting for reform means risking the marriage value cliff in the meantime. Our wait-or-extend guide weighs that trade-off.

Checklist for a PCL Lease Extension

1. Confirm the freeholder and lease terms from the Land Registry title and the lease.
2. Get a free first estimate from the calculator, then an independent valuation from a specialist surveyor.
3. Instruct a leasehold solicitor with experience of your estate or freeholder.
4. Serve a section 42 notice before the lease falls to 80 years if you are near it.
5. Negotiate against the counter-notice, using comparable settlements, and apply to the First-tier Tribunal if talks fail.

Frequently Asked Questions