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 leasehold 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.
A Conveyancing Solicitor’s Guide to Leasehold Property
Leasehold property remains a common and often practical way to own a home, particularly for flats. It can suit first‑time buyers, downsizers and investors—however, many buyers do not fully appreciate what leasehold ownership involves until the conveyancing process is underway. Understanding the key features of leasehold ownership (including service charges, ground rent, repair obligations and lease length) helps homebuyers make an informed decision and avoid unpleasant surprises later.
This guide explains what a leasehold property is, how it compares to freehold, and the main advantages and disadvantages to consider before buying.
Buying, selling or remortgaging? Use our online conveyancing quote calculator to obtain an instant conveyancing quote.
What is a leasehold property?
When a property is leasehold, the buyer owns a lease—a long contractual right to occupy and use the property—rather than owning the land outright.
- The freeholder owns the land and (usually) the building structure.
- The leaseholder owns the right to occupy the property for the lease term (for example, 99, 125 or 250 years), subject to the lease conditions.
When the lease term ends, the property typically reverts to the freeholder, unless the leaseholder has extended the lease or acquired the freehold (where possible). For most flats, leasehold is the standard form of ownership because a single building is divided into separate units, and the lease is the mechanism used to set out rights and responsibilities between all occupiers.
Freehold VS Leasehold
Is freehold better than leasehold, or vice versa? It depends on the property and the buyer’s priorities.
- Freehold usually offers greater control over the property (subject to planning law, restrictive covenants and, where relevant, estate rentcharges).
- Leasehold often involves shared management of a building and shared costs, which can be convenient—but also means ongoing obligations and less autonomy.
We cover this in more detail in Share of Freehold V Leasehold.
Why would anyone buy a leasehold property. What are the advantages?
- Lower upfront costs
Leasehold properties are often flats rather than houses and, depending on location and market conditions, may be cheaper than comparable freehold houses. A lower purchase price can reduce the initial financial burden, including:
- deposit size (as a percentage of price);
- Stamp Duty Land Tax (SDLT), where payable; and
- some transaction-linked costs.
(However, leasehold flats in prime areas can be expensive, and leasehold houses also exist—so price is not determined by tenure alone.)
- SDLT may be lower (depending on price and circumstances)
SDLT largely driven by the purchase price and the buyer’s circumstances (for example, first‑time buyer relief, higher rates for additional properties). Because flats can be cheaper than houses, SDLT may be lower, but this depends on the specific transaction. - Communal maintenance is organised for you
In many blocks, the freeholder or managing agent is responsible for arranging maintenance of communal parts such as:
- roofs, external walls and structure;
- stairways, corridors and lifts;
- shared lighting and safety systems; and
- communal gardens and grounds (where applicable).
This can be convenient because maintenance is coordinated centrally rather than requiring individual owners to organise repairs themselves. Leaseholders usually contribute to the cost through the service charge (see disadvantages below).
- Buildings insurance is usually arranged centrally
For most leasehold flats, the freeholder or management company arranges the buildings insurance for the whole building, and the premium is recovered through the service charge. This can simplify matters and ensure consistent cover across the block. Leaseholders typically arrange their own contents insurance separately. - Access to communal facilities
Leasehold blocks often provide shared amenities such as gardens, parking areas, bike stores, refuse areas, or roof terraces. These are usually managed as part of the building’s common parts. While leaseholders contribute to upkeep via service charge, they benefit from facilities that would be costly to provide for a single dwelling. - Practical option for buy‑to‑let (subject to the lease)
Leasehold flats can be attractive to investors because:
- flats may be more affordable than houses in many areas; and
- demand for well‑located flats can be strong.
However, buy‑to‑let suitability depends on lease terms. Many leases contain restrictions on subletting (for example, requiring notification, consent, or prohibiting short‑term lets such as Airbnb-style arrangements).
- Ground rent on many new long residential leases is now restricted
Following the Leasehold Reform (Ground Rent) Act 2022, most new “regulated” long residential leases granted after commencement must reserve only a peppercorn ground rent. This has reduced the prevalence of modern “escalating ground rent” clauses in new long leases. Recent proposals have also suggested a £250 per annum cap on all existing long-term leases, which could greatly reduce costs for anyone looking to purchase a leasehold property. It is important to note that this law is still under discussion and is expected to come into force in 2028.
What are the disadvantages of leasehold property?
- Restrictions on use
Leases almost always contain covenants (binding promises) that restrict what can be done with the property. Common restrictions include:
- no business use from the flat;
- limits on subletting or short‑term letting;
- restrictions on pets;
- restrictions on noise/nuisance; and
- requirements to carpet floors or follow building rules.
These covenants are legally enforceable. Breaches can lead to enforcement action, which may include legal costs and, in serious cases, forfeiture proceedings (subject to statutory protections and court oversight).
- Limited control over alterations and improvements
Many leases prohibit alterations without the freeholder’s written consent (often documented as a licence for alterations). Some leases prohibit structural alterations entirely. Even where consent is available, the process can add:
- delay;
- surveyor/legal costs; and
- conditions (for example, reinstatement obligations or specific contractor requirements).
- 80 years – the number to remember (but not the only one)
Lease length affects value and mortgageability. Two key practical points are:
- Marriage value: under the current statutory lease extension valuation regime for flats (the Leasehold Reform, Housing and Urban Development Act 1993), lease extensions usually become more expensive when the lease has 80 years or less unexpired because marriage value is generally payable (subject to the statutory assumptions and valuation principles).
- Lender requirements: many lenders have minimum lease term requirements, which vary by lender and product. A lease does not become automatically “unsellable” under 80 years, but it can become harder to mortgage, reducing the pool of buyers and impacting price.
If a flat owner takes the statutory (“formal”) lease extension route, the process is started by serving a section 42 notice (on the competent landlord), and the premium is assessed under the 1993 Act valuation framework. Informal lease extensions can be negotiated, but outcomes vary and must be checked carefully. At Starck Uberoi, our team of experienced Lease Extension Solicitors specialise in providing comprehensive legal services tailored to your needs.
You may also want to try our Lease Extension Calculator
- Disputes with the freeholder or managing agent
Leasehold ownership can be frustrating where the freeholder/managing agent:
- charges high or poorly explained service charges;
- delays repairs or fails to maintain the building;
- is slow in providing information for a sale/remortgage; or
- is difficult when granting consents.
There are legal routes to challenge certain charges and management issues (for example, reasonableness and consultation requirements for service charges, and Tribunal routes in appropriate cases), but disputes can still be time‑consuming and stressful.
- Issues with other leaseholders and limited direct enforcement
In many blocks, the freeholder or management company is the primary party with the contractual right (and responsibility) to enforce lease covenants against individual leaseholders. This can feel limiting where a neighbour breaches the lease and the landlord is reluctant to take action. In some circumstances, leaseholders may have other remedies (for example, nuisance claims), and some lease structures provide additional enforcement mechanisms—but it is not always straightforward. - Selling can be slower and more admin-heavy
Leasehold sales generally involve additional documents and third‑party information, such as:
- a management pack (often including accounts, budgets, insurance documents, fire safety information and replies to standard enquiries);
- service charge and ground rent statements; and
- compliance documentation required by the building/estate.
Management pack fees vary and delays are common, which can slow the transaction. Some leases also require a licence to assign or compliance certificates on sale (not all do), which can add time and cost.
- Service charges and major works
Even where the freeholder/managing agent organises repairs and insurance, leaseholders typically pay through service charges. Costs can rise due to:
- major works (for example, roof replacement, lift works, external redecorations);
- increased insurance premiums; or
- remediation and compliance work (depending on the building).
Service charge contributions are usually split according to the lease (equal shares, floor area, rateable proportions, etc.). Leaseholders may have rights to challenge certain costs, but the financial commitment can still be significant and unpredictable.
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
- Leaseholder Deed of Certificate
How Starck Uberoi Solicitors can help
Our leasehold solicitors stay up-to-date with developments in leasehold law and provide a proactive, efficient service whilst still ensuring everything is done to a high standard. We prioritise effective and clear communication with clients and make sure no questions are left unanswered. To book an appointment, call 020 8840 6640 or email solicitor@starckuberoi.co.uk.
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.
Our partner, Raminder Uberoi, can also provide a Notary Public Service at any of our London offices.
FAQs
Can I buy the freehold of my leasehold property?
You can buy your freehold collectively with your fellow leaseholders as long as at least 50% of the building’s eligible leaseholders also want to purchase the freehold. The process of doing so is called collective enfranchisement, which our property solicitors can assist you with. After the sale has completed, each leaseholder who purchased the freehold will own a share of the freehold as well as the leasehold property they originally owned. Owning a share of the freehold allows leaseholders to grant lease extensions for little to no premium and to control maintenance and buildings insurance for the property.
Can you rent out a leasehold property?
You can – as long as there are no prohibitions on letting contained in your lease – and leasehold properties often make better investments than freehold properties. Leasehold properties are generally cheaper than freehold properties and located in more desirable areas.
Is it more difficult to get a mortgage on a leasehold property?
Not necessarily, but lenders will review the lease carefully. They typically focus on the unexpired lease term, the ground rent and rent review clause, the level and history of service charges, and any other terms that could affect their security. There is no single minimum lease length accepted by all lenders. Although 80 years is an important threshold for lease extension valuation (marriage value), many lenders require more than 80 years unexpired at completion and requirements vary between lenders and products.
Do you still have to pay ground rent on a leasehold property?
It depends on when the lease was granted and what the lease says. The Leasehold Reform (Ground Rent) Act 2022 generally restricts ground rent to a peppercorn for most new regulated long residential leases granted after commencement (subject to statutory exceptions). Existing leases granted before commencement usually remain subject to their contractual ground rent unless it is reduced or removed (for example, by a deed of variation or, for flats, a statutory lease extension). The Government has also proposed further reform to limit ground rent in existing long residential leases and, over time, move those rents towards a peppercorn; however, as at February 2026 no general statutory cap is in force, the detail and timing remain uncertain, and existing leases continue to operate under their current terms unless and until any new legislation is enacted and commenced.
What questions should I ask about a leasehold property?
The most important things to check are: the length of the lease, the ground rent (amount and how it increases), what rights are included (for example, parking, storage or garden access), what restrictions apply (letting, pets, alterations), what you must pay as a leaseholder (service charge, insurance, reserve fund), and whether there are any planned major works that could increase costs.
ALEP
We are proud to be Members of the Association of Leasehold Enfranchisement Practitioners (ALEP). ALEP Members are vetted to ensure that they have the requisite expertise in leasehold enfranchisement. ALEP acts as a badge of assurance and confirms that we can handle potentially complex collective enfranchisement transactions.
