Prior to the exchange of contracts, the authority had been tied into a 127-lease that began in 1971. The estimated £230 million savings includes rental costs over the remaining lease period, less the cost of borrowing.
Leader of the City of Lincoln Council, councillor Darren Grice, said:
"We are now the masters of our own destiny in terms of what we do with City Hall.Had the council's lease run to its completion it would have ended in 2097.
"Thanks to this decision the city council will no longer have to pay an annual rent and even including borrowing costs this will save Lincoln taxpayers over £230 million.
"We have exchanged contracts at exactly the correct time, when property values are relatively low, and when borrowing is at an affordable level."
In 1971 the rent was £62,000 a year. This figure has been reviewed on a seven year cycle and in 2006 was set at £619,656 a year. It is estimated that if the authority continued to rent the property, it would cost the taxpayer £762,099 by 2013 and over £9 million by 2097.