Work out what your ground rent is worth to the freeholder · Free & instant
Work out what your ground rent is worth to the freeholder, and how much it adds to an extension premium.
When you extend a lease under the 1993 Act your ground rent falls to a peppercorn (zero), so the freeholder is compensated for the income they give up. That compensation, the capitalised ground rent, is the present value of the rent for the rest of your current lease. This tool calculates it for four types of ground rent, using a 5% rate:
The tool also shows the “years’ purchase” (YP) factor: the multiple of the annual rent that the capitalised value represents.
| Ground rent | Type | Lease left | Capitalised value | What it means |
|---|---|---|---|---|
| £250 | Fixed | 75 years | about £4,870 | About 19.5 times the annual rent |
| £250 | Fixed | 90 years | about £4,940 | Close to the 20-times limit |
| £500 | Fixed | 60 years | about £9,460 | Doubling the rent doubles the value |
| £250 | Doubling every 25 years | 90 years | about £7,370 | Later doublings are heavily discounted |
| £250 | Doubling every 10 years | 90 years | about £45,300 | Frequent doubling is very costly |
| £250 | RPI-linked (approx.) | 90 years | about £10,600 | Assumes about 3% a year |
The first thing to notice is that for a fixed rent the value cannot exceed 20 times the annual rent (the perpetuity value at 5%), however long the lease. The second is how steeply a short doubling period increases the value. That is why doubling ground rents have been such a problem for owners of newer flats; see ground rent explained and the proposed £250 cap.
It is the present value of the ground rent the freeholder will lose when your ground rent drops to a peppercorn on extension. It is calculated by multiplying the annual ground rent by a years' purchase factor, using a discount rate of 5% in this calculator. It is one of three components of a lease extension premium.
A great deal if the rent doubles frequently. On our calculator a £250 rent that doubles every 25 years with 90 years left is worth about £7,400, but one that doubles every 10 years is worth about £45,300. Check your lease for the review period and read the wording carefully.
For a fixed ground rent the capitalised value cannot exceed 20 times the annual rent at 5%, however long the lease. Rents that escalate can be worth much more. Valuers may use a different capitalisation rate, which changes the figures.
The cap is proposed in the draft Commonhold and Leasehold Reform Bill 2026 and is not law. If enacted, it would limit existing ground rents and so reduce the capitalised value on many leases, but the details, including the transition period and any exemptions, are not settled. See our guide to the proposed cap.
No. It values the ground rent only. A premium also includes the reversion and, if 80 years or fewer remain, marriage value, plus professional fees. Use the lease extension calculator for the full estimate.
This calculator’s methodology is reviewed by James Norton MRICS, a Chartered Surveyor and Registered Valuer. Legal and process content is reviewed by Sarah Mitcham, a property solicitor. See our calculator methodology and editorial policy. The calculator provides estimates only and is not a valuation or legal advice.
We’ll notify you when 2024 Act provisions come into force and when new premium rates are confirmed.