What is Leasehold Property?

What is leasehold property and how is it different from freehold property?

If you have leasehold ownership of a property, you own a lease which allows you to occupy the property for a period of time and on the terms listed in the lease. When the lease expires, ownership of the property reverts back to the freeholder, who also owns the freehold (the land that your property is built on) of the building. Freeholders will generally be responsible for the upkeep of common areas such as stairways, external maintenance of a property and putting buildings insurance in place onto the building. The leaseholder’s responsibilities will vary depending on the terms of the lease but will usually contributing financially to the property’s maintenance (through service charges) and keeping the property in a habitable condition by the terms of the lease.

Leaseholders make up a large proportion of the UK’s homeowners, as leasehold properties often offer a more affordable option compared to freehold homes. However, this does not mean that leasehold ownership is in any way more straightforward than owning a freehold property. Our specialist leasehold conveyancing solicitors discuss the more complicated lease conveyancing matters that may arise and what you can do should you face one of these problems.

 Buying, selling or remortgaging? Use our online conveyancing quote calculator to obtain an instant conveyancing quote.

Current law and proposed reforms

The introduction of the Leasehold and Freehold Reform Act 2024 (LAFRA) is set to bring significant changes for leaseholders and property owners across England and Wales. The Act increases the statutory lease extension term from 90 years to 990 years, abolishes marriage value, and ensures that all extended leases carry only a peppercorn (£0) ground rent. In addition, the Government has proposed introducing a £250 per annum cap on ground rent for existing leases. This cap is intended to protect leaseholders who still pay ground rent under historic leases that predate the Leasehold Reform (Ground Rent) Act 2022. The proposal has not yet come into force, but once implemented, it will apply only to existing leases that continue to attract ground rent, ensuring no leaseholder pays more than £250 annually. New or extended leases will continue to be restricted to a peppercorn (£0) ground rent. Once the Act comes into force, it is expected to impact the overall cost of extending a lease, potentially making the process more affordable for many leaseholders.

How many years should be on a lease?

The more years that remain on your lease, the better. Leases are generally granted with between 90 and 125 years on them, but they can have up to 999 years on them and you can extend your lease by either serving a Section 42 notice on or arranging an informal lease extension with your freeholder. The more years that are left on your lease, the more valuable the property will be and the cheaper a lease extension will usually be. Be wary of taking on a lease with close to 80 years remaining on it. Once a lease has fewer than 80 years left on it, it incurs “marriage value” (the value gained when the lease is extended) which the freeholder is entitled to when extending your lease. Furthermore, if your lease has less than sixty years remaining on it, you may struggle to obtain mortgage funding for it or sell it on. Lease extensions become more expensive the fewer years that are left on the lease, so it is best to get your lease extended sooner rather than later. In accordance with the Housing and Urban Development Act 1993, you can extend the terms of your lease at any time by serving a section 42 notice onto your freeholder which offers a premium. Your freeholder will either send a counter notice accepting or denying your claim, and from there you can agree on a fair price from the premium.

As part of a statutory lease extension, the lease term is increased by 90 years in addition to the existing unexpired term, and the ground rent is reduced to a peppercorn rent (effectively nil). This means the leaseholder will no longer be required to pay ground rent after the extension, which is an important long-term financial benefit. The premium paid to the freeholder compensates them for this loss of future ground rent income, as well as the increased value of the extended lease.

To get an instant Lease Extension quote, use our Lease Extension Calculator. It provides you with an instant guide price for your premium and fees in seconds. Enter three key details — your unexpired lease term, current ground rent and the flat’s estimated value after extension — and the calculator will produce a reliable, indicative range based on the 1993 Act valuation framework. Use it to budget, compare options (statutory vs informal) and inform negotiations. Our leasehold team will then design the most cost‑effective extension strategy for your circumstances. Try the Lease Extension Calculator, then speak to us for a tailored plan and fixed‑fee quote.

What should I look out for in a lease?

One of the most important things to look out for when taking on a lease (or accepting a deed of variation of your lease – more on this below) is ground rent issues. In 2017, many leaseholders fell victim to the ground rent scandal when they signed leases which obligated them to pay ground rents which doubled quickly; these terms were not made clear and many leaseholders found themselves trapped in properties they could neither sell or afford to live in due to spiralling ground rent charges. Although legislation has since been put in place to assist leaseholders trapped in this scandal, existing leases can still contain ground rent provisions which may appear low at first glance but then double rapidly. The Leasehold Reform (Ground Rent) Act 2022 restricts monetary ground rent in most new regulated long residential leases granted after commencement, but it does not generally change ground rent terms in existing leases. Being proactive can help ensure you don’t find yourself in the same position in the future.

Our experienced property team can guide you through every step of the process. We can help by reviewing your lease and advising on the most effective solution for your circumstances — whether that’s through a Deed of Variation, a Deed of Surrender and Regrant, or by arranging a formal or informal lease extension. Each route offers different benefits depending on your goals, and we’ll work closely with you to secure the best possible outcome for your property.

Read more tips for purchasing a leasehold property And Mortgage Lender Requirements.

There’s a mistake in my lease – what can I do?

Perhaps your lease:

• Has your name listed incorrectly
• Has the rent payable listed incorrectly
• Does not comply with your mortgage lender’s requirements
• Does not grant you access to a part of the building you think you should have access to

Even small mistakes can cause significant problems for you later on, so it is important to fix mistakes as soon as you spot them. The process for amending a mistake depends on the nature of the error and how it affects your lease. Our leasehold solicitors can advise you on the legal implications of your lease terms and help you change your lease terms to reflect what was originally agreed between yourself and your freeholder.

There are several legal mechanisms available to correct or update your lease. A Deed of Variation can be used to make amendments to specific clauses, such as correcting drafting errors, updating ground rent provisions, or changing repair obligations. In cases where the changes are more substantial — for example, when the lease term itself needs to be restructured — a Deed of Surrender and Regrant may be required. Alternatively, if you are looking to extend the length of your lease or reduce the ground rent, you may benefit from a formal or informal lease extension.

Plus, you often need your lender’s consent for any changes to the lease where the property is mortgaged and the change affects the lender’s security. For this reason, it is wise to instruct a conveyancing lender panel solicitor, who can act on behalf of both yourself and the lender – otherwise, the process takes longer and becomes more expensive. We are on the trusted conveyancing panel for the majority of high street lenders, including Barclays, Halifax, HSBC, NatWest, Nationwide and Santander.

Should I accept an informal lease extension from my landlord?

An informal lease extension could be a great way to save money on your lease extension, plus you’ll often be able to negotiate a term different from the statutory extension you can extend by with a Section 42 Notice. However, it is vital that you check that the premium you’re being offered is actually a fair deal, or whether you’d pay a smaller premium if you took the statutory route. It is advised you instruct a qualified surveyor to suggest a figure you could expect to pay for a statutory lease extension in order to have something to base your negotiations on. Find out more about negotiating a lease extension on your property here.

Should I buy a flat with a short lease?

The trouble with buying a flat with a short lease is that mortgage lenders are frequently unwilling to lend on properties with fewer than 65 years remaining on the lease. Plus, it becomes far more expensive to extend a lease that has fallen below 80 years due to the “marriage value” it incurs; this is the increase in value a property receives by having its lease extended, which the freeholder is entitled to. You can still buy a flat with a short lease, and you could even secure a mortgage on it if you assign the benefit of a section 42 notice. Put simply, assigning the benefit of a section 42 notice allows the seller to begin the lease extension process on your behalf, so that you can finish extending your lease after completion (or in parallel with the purchase) in order to comply with mortgage lender requirements.

Why does it take longer to buy a leasehold property?

Put simply, it is because there is much more legal work to complete when purchasing a leasehold property compared to a freehold. As well as the general legal work involved with any conveyancing transaction, the conveyancer will need to check additional documentation that isn’t applicable to freehold purchases including:

• The lease’s terms – this includes its length and whether there are any covenants which could cause problems for you
• The LEP1 form (the form which sets out things like ground rent, service charges and buildings insurance)
• The management pack (how and by who the property is maintained)

This could potentially mean that the solicitor not only needs to raise enquiries about the property itself, but also about its lease. Our specialist solicitors are experienced in handling even the most complicated lease conveyancing matters efficiently. Find out more about the leasehold conveyancing process on our blog on Purchasing a leasehold Property here.

How do I sell a leasehold property?

Selling a leasehold property is a little more complicated than selling a freehold property as there are more documents to be taken into account by the buyer’s solicitors. In addition to the typical documents, you would need when selling any property (such as your proof of address), some of the documents you will need include:

• A Copy of your lease: If you don’t have the original copy of the lease, our solicitors can download a copy of the lease from the land registry for you.
• A LPE1 form: This is a legal document completed by the freeholder or their managing company which contains information on the lease, such as ground rent, service charges, maintenance information, buildings insurance and who the buyer should serve notice to once the property has been sold. You will need to obtain this from your freeholder or their managing company and should request it as soon as possible – managing companies are notorious for taking a long time to respond.
• The Fixtures and Fittings Form: This sets out which fixtures and fittings will be sold along with the property, such as kitchen appliances.
• The Leasehold Information Form (Form TA7): This form will include general information about the property, such as whether it’s a flat or a house, who it is managed by and who the freeholder is, for example. It will generally contain some of the same information that will be given in the LPE1 form.
• Consent forms or compliance certificates: If you’ve made any improvements to your property that you needed your landlord’s consent for, make sure to include any compliance certificates stating the changes that were made and proving that you had your landlord’s consent to make those changes.

How do I speed up the sale of my leasehold property?

The best way of making sure your sale keeps moving is simply to get as much of the paperwork completed as you can as quickly as possible. One of the main causes of delay in leasehold sales is obtaining the LPE1 form, as the seller has to rely on their freeholder to complete the LPE1 form in a timely manner. Additionally, your choice of solicitor matters. By instructing our fast conveyancing solicitors, you can be confident that your leasehold sale will be completed in as little time and with as little stress as possible.

Should I extend my lease before I sell my leasehold property?

Finding a buyer for a short lease property is notoriously difficult due to how unlikely it is that a mortgage lender will lend on a property with fewer than 80 years remaining. To make matters worse, if there are less than 80 years left on your lease, your lease will incur “marriage value,” which will make extending your lease more expensive. Extending your lease before you sell is an option, but there is a better solution if you can find a buyer.

Our expert Lease Extension Solicitors can offer detailed guidance tailored to your individual situation. To get an instant Lease Extension quote, use our Lease Extension Calculator.

Can I make alterations to my leasehold property?

The extent to which you can make alterations and improvements to your leasehold property without your landlord’s consent will usually be set out in the lease. If you want to make larger renovations that your lease does not allow, you can request your landlord’s permission by applying for a licence of alterations. Whether you need a licence of alterations or not will depend on the terms of your lease and what you intend to do, but you will generally need one if you are planning on:

• Altering the property’s external structure
• Removing structural walls
• Changing any windows
• Installing sanitary facilities
• Installing heating services or other service installations

Our complicated lease conveyancing solicitors can offer legal advice if you’re considering altering your leasehold property. Find out more about applying for a licence for alterations for your lease in our blog here.

Can I sub-let my leasehold property without the freeholder’s consent?

This will depend on the terms in your lease. Sub-letting may be entirely prohibited, possible only with the landlord’s consent or possible only under conditions stated in the terms of the lease. If your lease currently prohibits sub-letting, you could ask your landlord to vary your lease. You can alter the terms of your lease with a deed of variation of lease, which will amend the terms of your lease.

Can I buy the freehold of my leasehold property?

Maybe you’re fed up of your freeholder’s excessive service charges or frustrated with having to wait months for maintenance to be done. If you are an eligible lessee, you may be able to purchase the freehold collectively with the other qualifying lessees through a procedure called Collective Enfranchisement. You may be an eligible lessee if:

• You are a qualifying tenant (typically a leaseholder holding a long lease)
• Your lease is a “long lease” (generally, originally granted for more than 21 years)

At least half of the other qualifying lessees must agree to purchase the freehold with you and the premium you pay can be negotiated with the freeholder. Other requirements include:

• No more than 25% of your building can be in use for non-residential purposes
• There must be at least two flats in the building
• At least two-thirds of the building’s flats must have long leases (leases which had 21 or more years over them when they were initially assigned)

As aforementioned, there can be many benefits of collective enfranchisement such as the power to control maintenance on your property and more room to negotiate inexpensive lease extensions. However, be aware that by buying the freehold you also take on the freeholder’s responsibilities, such as arranging building’s insurance.

Is my freeholder entitled to develop over the roof of my property?

As of August 2021 certain permitted development rights may allow upward development in some circumstances, subject to detailed conditions, limitations and the need for prior approval. Unsurprisingly, many freeholders want to take advantage of this – however, you should first check that they aren’t infringing on your rights. Often, the freeholder of the property will also own the airspace above the property, but this isn’t always the case. Sometimes the lease for a top-floor flat will include access to or ownership of the rooftop, and some leases even provide access to the rooftop for all tenants; if this is the case, then the freeholder will need to vary the lessees’ leases (with the lessees’ consent) to remove their ownership of or access to the roof before they can develop. Find out more about airspace developments in our blog post on extending properties upwards into airspace.

My freeholder has offered to sell the freehold. How should I respond?

If your freeholder wants to sell the freehold title of the property, you and the other leaseholders will usually have right of first refusal. If buying the freehold is possible for you, it may be wise to do so; you’ll have more freedom to negotiate a cheap lease extension, have more control over how and when maintenance is performed and in many cases you can reduce or eliminate monetary ground rent going forward and take control of management, although ongoing maintenance and insurance costs will still need to be funded by the leaseholders (often through service charge arrangements). Before your freeholder can sell the freehold to anyone else, they must serve a section 5 notice onto all of the leaseholders eligible to buy the freehold. You should then speak with your other lessees to decide whether or not to purchase the freehold collectively. At least 50% of the eligible tenants need to agree to the purchase in order for you to buy the freehold. If you do decide to purchase the freehold, you will need to nominate someone to handle the sale and serve a section 6 notice in response to the freeholder, informing them you accept. You will need to do this in the allotted timeframe that will be stated within the Section 5. Once the sale has gone through, you and the other freeholders can negotiate the terms and price of the sale with the landlord.

I want to split my property into flats. Will I need to create new leases?

Although you technically don’t need to create new leases to sell or rent out your flats, most mortgage lenders will often be unwilling to lend on flats which do not have leases – ergo, you’ll probably need to assign leases if you want to sell your flats or rent them out under a buy to let mortgage. The lease plans will need to show information on boundaries, communal areas, parking and access to the garden, amongst other things. It’s also important to note that the freeholder of the property can also be a leaseholder. Many owners may also choose to use a company structure for the grant and management of leases, depending on the intended management arrangements and lender requirements. This way, you can create new leases without needing to already have someone to assign them to. When you create your new leases, you should ensure they abide by mortgage lender’s requirements in order to avoid deterring buyers. Many mortgage lenders impose certain restrictions on which leasehold properties they will lend on, such as:

• Ground rent: lenders are generally unwilling to lend on leasehold properties with spiralling ground rent terms in the lease.
• Management companies: If a managing company has been appointed to maintain the property, the lease must state that the managing company (or the landlord/managing agent) has appropriate rights of access and enforcement to perform management and maintenance functions. If they don’t have access, the lease must confirm that the landlord is obligated to perform any maintenance that the managing company cannot do.
• Professional Consultants Solicitors (PCC): If the property has been converted within the past 6 years, a lender may require a PCC stating that the alterations have been performed in line with building regulations.

For more information on lender requirements for leasehold properties, please see our blog post titled Leasehold Solicitors London: Buying a Leasehold Flat and Mortgage Lender Requirements. Speak to our complicated lease conveyancing solicitors if you’re thinking of splitting your property into flats – we can advise on the legal implications of your leases as well as register the leases with the Land Registry on your behalf.

The importance of instructing a specialist leasehold solicitor

Even experienced property solicitors can be tripped up by some of the nuances of leasehold law, so it is essential that you instruct a solicitor with an extensive understanding of leasehold property to avoid costly mistakes later. With Starck Uberoi, you can be confident that your leasehold matter is in safe hands. We offer a wide range of leasehold services each to a high standard, including:

• Leasehold purchases and sales
• Lease Extensions
• Leasehold disputes

Our Offices

Our Brentford Solicitors, are located on the High Street in a grand three-story building, just a short distance from Brentford County Court. Our Belgravia solicitors are located Just a 5-minute walk from Victoria tube station in Grosvenor Gardens. Our Ealing solicitors are only a short walk from both Ealing Broadway and South Ealing and our Richmond Solicitors have the pleasure of overlooking the picturesque Richmond Green. Finally, our Solicitors in Canterbury are located in the within the UNESCO World Heritage Site of Canterbury Cathedral. Our partner, Raminder Uberoi, can also offer a Notary Public Service at any of our London offices.