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Leasehold Properties: What to Know Before You Buy

Written by Reviewed by Graham Norwood

15th Apr 2020 (Last updated on 19th Jun 2020) 15 minute read

Leasehold is one of the two main forms of legal ownership of property in England and Wales. When you purchase a leasehold property, you do not own it. Leaseholders can live in the property for a fixed period of time which will be outlined in the lease. 

Buying this type of home can often be expensive due to the many other fees involved like ground rent and service charges. This is why we’ve created this article, to help you understand the process before committing to the sale.

Compare My Move work with a range of property and finance experts to create quality content that will aid you through the buying and selling process. In this article, we will discuss what ‘leasehold’ means as well as what you generally need to be aware of when buying a leasehold property. 

This article will cover the following:
  1. What Does ‘Leasehold’ Mean?
  2. What Types of Properties are Usually Leasehold?
  3. What is the Length of Your Lease?
  4. Solicitor Fees For Buying A Leasehold Property
  5. What is a Service Charge?
  6. What are Administration Fees?
  7. What is Ground Rent?
  8. Can You Buy the Freehold?
  9. Extending the Lease of a Property
  10. Leasehold Restrictions
  11. Advantages and Disadvantages to Buying Leasehold Properties
  12. Can I Get A Mortgage On A Leasehold Property?
  13. Leasehold Mortgage Requirements
  14. What Lease Length Do I Need For A Mortgage?
  15. Commonhold Properties
  16. Saving Money During the Buying Process

What Does ‘Leasehold’ Mean?

Leasehold and freehold are the two main forms of legal ownership of property in England and Wales. There are a variety of differences between freehold and leasehold, all of which you can read in our previous article. However, the major difference is that you can only occupy leasehold properties for a fixed period of time. You do not own the building outright. 

When buying a leasehold home, you will sign a legal agreement with the landlord or freeholder. This agreement is known as a lease and will state how long you can occupy the property before ownership returns to the landlord. 

Leases will typically last between 99 to 125 years, but some can extend to as high as 999 years. It’s important to read your lease thoroughly before committing to the move as some leases can be much shorter - sometimes just a few years. 

Once you purchase a leasehold property, it may be possible to purchase the freehold. This will allow you to take ownership of both the property and the land it’s on. This is something you should discuss when reviewing the lease from your landlord. 

What Types of Properties are Usually Leasehold?

The majority of properties in the UK are sold as freehold, where you can purchase both the property and the land it was built on. However, there has been a growing number of leasehold homes on the market. 

The Ministry of Housing, Communities and Local Government discovered that there were 4.3 million leasehold homes in England between 2017-2018. This equated to 18% of the English housing stock. More than two-thirds of the leasehold properties were flats whilst 31% of them were houses.

In England and Wales, the majority of leasehold properties are flats, even if there’s a share of the freehold owned by the leaseholder. Leasehold flats are usually located in a larger block containing shared facilities or communal spaces. There was a rise in the number of leasehold new-build houses before 2019, but this trend has been stopped and you will most likely only be confronted with a lease when purchasing a flat. 

This is due to the government announcing in 2019 that “all new-build houses will be sold as freehold” to “tackle unfair leasehold practices.” This lowered the sale of leasehold properties from 11% to just 2% during 2019 alone.

If you’re looking to purchase a new-build home, it should not be sold as leasehold. Carefully read through your contract when buying a home and ensure you understand whether the property you’re interested in is freehold or leasehold. 

What is the Length of Your Lease?

Before committing to the purchase of a leasehold property, you should double-check the length of the lease. If the lease has less than 70 to 80 years left, then it can be difficult to get a mortgage for it. 

Most leases are between 99 and 125 years. You should only accept a lease of fewer than 90 years if you already have a written agreement in place with the freeholder to extend it as part of the purchase. 

The majority of properties with a lease of 70 or 80 years or less will be rejected by mortgage lenders as the length will affect the value of the property. Make sure you know the length of the lease before committing to the sale. 

Solicitor Fees For Buying A Leasehold Property

Because of their complexity, you’ll have to pay more in conveyancing fees when you buy a leasehold property, compared to buying a freehold property. Below we’ve listed the average legal fee for leasehold properties with a range of property values.

Property ValueAvg. Solicitor Fee For Buying A Leasehold Property*

Up to £100,000


£100,001 to £200,000


£200,001 to £300,000


£300,001 to £400,000


£400,001 to £500,000


£500,001 to £600,000


£600,001 to £700,000


£700,001 to £800,000


£800,001 to £900,000


£900,001 to £1,000,000


*We took a sample of fees from 50 licensed conveyancers across the UK to find these averages, but this is just an indication of costs. Fees will greatly vary depending on your situation and conveyancer.

What is a Service Charge?

When you buy a leasehold property, there will be on-going costs to pay as well as the outright cost of buying the home. One of these fees is the service charge. 

A service charge is a fee payable by all residents. It contributes towards the general maintenance and upkeep of the shared building. For example, if you’re living in a block of flats, it would be used to repair or clean shared or communal spaces such as the staircase, corridors, exterior walls or roof. 

Some larger blocks may have a managing agent to set the service charge and arrange any repairs or maintenance. In smaller blocks, these responsibilities may fall to the residents’ committee. Currently, there is no cap on how much you may be expected to pay. 

This annual fee is typically fixed but it could change year on year. Ask your conveyancer or conveyancing solicitor to explain the charges before you purchase the property. Ask if the lease administrator has any plans for future work that you may be responsible to pay for.  

The service charge must be explained in your lease. It should describe how the service charge will be organised and what you may be charged for. If you have a service charge, you have the right to:

  • Ask for a summary of how it’s worked out and what it will be spent on
  • See any paperwork or receipts supporting the summary

It is a criminal offence if a landlord does not give you the information stated above.  

What are Administration Fees?

Administration fees are payments charged by the freeholder for services connected with your buying, selling or use of the property. This can include anything from charges for document applications to exit fees. 

An example would be a seller being expected to pay for management information that the landlord or freeholder will need to provide a buyer. This will be required during the conveyancing process when selling a leasehold property. 

These fees should be explained in your lease agreement. Your conveyancer should review your lease and advise you further.

What is Ground Rent?

Ground rent is an annual or monthly fee the leaseholder must pay to the freeholder. It is usually a fixed sum and is a fee paid to rent the land the property is built on from the freeholder. The amount as well as how and when you need to pay, will all be outlined in your lease. It’s typically around £100 a year but can vary greatly. 

Some homeowners have seen their ground rent double every decade, turning a small fee into a significant long-term bill. This is called a spiralling ground rent and should be scrutinised by your conveyancer.

The Competition and Markets Authority (CMA) investigated these unfair, spiralling fees in February 2020, announcing that they “found worrying evidence that people who buy leasehold properties are being misled and taken advantage of.” A spiralling ground rent contributed to this evidence as it meant people “often struggle to sell their homes and find themselves trapped.”

If you’re considering purchasing a leasehold property, it would be wise to keep up-to-date on the CMA’s website as they are looking to “reduce ground rents for new leases to zero” in the coming years. Always read your lease thoroughly before purchasing the property and work alongside your conveyancer to ensure you understand each clause and section. 

You shouldn’t have to pay ground rent unless the freeholder has sent a formal, written demand for it. If you then refuse to pay, they can take legal action once you’ve received this demand. Landlords can also recover unpaid ground rent as far back as 6 years.

Can You Buy the Freehold?

You may ask the landlord to sell you the freehold at any time. However, there are different legal steps and rules depending on whether your property is a flat or house. 

If it’s a flat, you will have to buy a share of the freehold. However, if it’s a house, you have the right to buy the freehold. 

What is a ‘share of freehold’?

Typically associated with leasehold flats, owning a ‘share of freehold’ is when the leaseholder also owns a share in the freehold. Leaseholders have a legal right under the Leasehold Reform, Housing and Urban Development Act 1993 to buy the freehold of their building if they meet the required criteria.

The share can either be set up where the freehold is held in a company structure and the leaseholder then owns a share in the company, or the freehold is simply divided directly into shares. 

Properties with a share in the freehold are typically easier to sell but there will likely be a fee for acquiring the freehold. It’s also important to keep in mind that you may have to acquire a share with fellow leaseholders, especially when dealing with a block of flats. 

Buying the freehold

If you have a leasehold house, you have the legal right under the Leasehold Reform Act 1967 to buy the freehold. Before you commit to buying the freehold, do your research and find out who owns the freehold and whether it’s likely to be sold on and to who. 

Whether you’re thinking about buying the freehold soon or in the future, start enquiring as soon as possible. You’ll need to be sure that the property is right for you in the long-run and that you’re actually able to buy the freehold. 

You may also require legal advice from a solicitor with experience of lease extensions and freehold purchase. Not all conveyancers or general solicitors have this experience.

Extending the Lease of a Property

You’re allowed to ask your landlord to extend your lease at any time. You legally have the right to extend your lease by 50 years after owning the house for 2 years. If it’s a flat, you can extend the lease by 90 years if you qualify. 

If you can’t agree on a deal with your landlord, you’ll have to go to a tribunal which is often a slow and costly process. 

However, even without this added legal process, extending a lease can be expensive, costing you thousands of pounds. The final price will depend on a variety of factors, including the value of the property, the ground rent and the original length of the lease. 

If the lease on the property you want to buy needs to be extended, then it is up to the seller and current owner to claim the right to extend. This must be started before the property is passed on you as you will then have to complete it yourself. If the seller doesn’t make the claim before the transaction is completed, you will have to wait until you’ve owned the property for 2 years. 

Leasehold Restrictions

As the freeholder owns the property, there may be a few restrictions on what the leaseholder of the property can do. These are called restrictive covenants. When you receive the lease, carefully read it through and ask any questions concerning restrictions on the property.

Some restrictions could impact your lifestyle, such as not being allowed a pet whilst living in the leasehold home. Some may not have any impact but it’s wise to ask as many questions as possible to gain clarity. Think about how they could affect your life within the property, not just now but in the future. 

Advantages and Disadvantages to Buying Leasehold Properties

There are a variety of advantages and disadvantages of owning a leasehold property, many of which will depend on the lease itself and the current upkeep of the building. To help you decide if it’s right for you and your personal circumstances, we’ve created a list of both the pros and cons of buying a leasehold home:

Advantages of buying a leasehold property: 

  • You won’t have to ask your neighbours to help with the repairs or general upkeep of the building as it’s already been paid for with the service charge. 
  • Your freeholder should be the person you go to for any complaints or issues, ensuring they’re fixed within a reasonable period of time. 
  • The building insurance is often organised by the freeholder.
  • If you don’t want to be a leaseholder, you can eventually apply to buy the freehold.
  • If the lease is under 100 years, the property will often be sold for a lower price.

Disadvantages of buying a leasehold property:

  • A lease is almost like a long-term rental agreement. Once it expires, you will have to ask the freeholder to extend the lease which is often expensive. 
  • There’s not always a guarantee that the freeholder will agree to extend the lease.
  • The service charge and ground rent can be very expensive.
  • The lease could contain a variety of restrictions which could affect your life when living in the property. These restrictions could also make it difficult to sell the property in the future.
  • If the lease is below 80 years, it will be difficult to get a mortgage and sell the home.
  • If you want to make any changes to the property, you will need the freeholder’s permission. They may ask for fees to do this work.
  • The freeholder will be the one to hire any required contractors, meaning you will have no control on who completes the work and whether they’ll do a good enough job.

If you’re still unsure whether buying a leasehold property is right for you, you can contact The Leasehold Advisory Service for further help and advice on the matter.

Can I Get A Mortgage On A Leasehold Property?

Many mortgage lenders provide leasehold mortgages, but the key factor in the process being simple or extremely difficult will be the length of the lease. It’s significantly harder to be accepted for a leasehold mortgage if your lease is short, with anything under 80 years causing difficulty when applying for a mortgage.

When applying for a mortgage for a short leasehold term, you will face higher interest rates on the mortgage as well as requiring a bigger mortgage deposit. Leasehold properties typically have a lease ranging from 90 to 120 years but can last as little as 40 years and as long as 999 years. Many mortgage lenders will prefer a lease extended to a minimum of 40 years after your mortgage has ended.

Before you commit to buying a leasehold property, you should check how long is left on the lease. Your property surveyor will be able to tell you how long is left, so make sure you compare surveyor quotes to save money on your survey. 

Leasehold Mortgage Requirements

You will need to meet certain requirements and criteria to be accepted for a leasehold mortgage, just like you would with a traditional mortgage. The specific details of the requirements will vary depending on the mortgage lender you choose. You should expect the lender to assess your affordability when applying for a leasehold mortgage, including your income and outgoings. 

The main factor lenders will judge is the number of years left on your lease. According to the Council of Mortgage Lenders’ ‘Lenders’ Handbook’, the minimum unexpired lease term required for a leasehold mortgage is around 70 years from the date the mortgage begins. Many lenders also usually require a minimum of around 30 years to be left on the lease after the mortgage term ends. 

This is just an average and the handbook shows lenders that require a lease term as little as 20 years at the end of the mortgage term, all the way to 250 years from the start of the mortgage term.

What Lease Length Do I Need For A Mortgage?

We’ve listed some of the most popular mortgage lenders and their minimum lease length required for a leasehold mortgage, taking the data from the Council of Mortgage Lenders’ ‘Lenders’ Handbook’.

Mortgage LenderLease Length Required for Leasehold Mortgage

Lloyds Bank

Mortgage term plus 30 years subject to an overall minimum term of 70 years.


Minimum of 70 years left on lease when you apply for a mortgage


More than 30 years remaining on the lease beyond the term of the mortgage at the outset.

Scottish Widows Bank

Minimum of 70 years unexpired at the start of the mortgage.

TSB Bank

Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption.

Yorkshire Building Society

85 years from the date of completion of the mortgage.

Commonhold Properties

In addition to leasehold and freehold there is a third and relatively rare type of property - commonhold.

Some regard commonhold as a type of freehold, but it has been legally separate since 2004.

Well under one per cent of properties are commonhold, and they are always flats within a block, so it is highly unlikely you will encounter it.

Under the commonhold system, all flat owners are automatically members of a company that owns the freehold and therefore owns the block, making it easier - in theory - to run the entire building for the benefit of the flat owners.

 For an existing block of leasehold properties to become commonhold, they would require the consent of the current freeholder - who, in reality, has little incentive to agree to the change.  

Saving Money During the Buying Process

When you’ve decided on the property for you, make sure you compare your solicitor fees, property survey costs and removal costs with Compare My Move to save both time and money during your move. 

Whether you’re looking to buy a freehold or leasehold property, we have a network of verified and trusted conveyances, property surveyors and removal companies all across the UK to help you through the buying process.

Zenyx Griffiths

Before Compare My Move, Zenyx once wrote lifestyle and entertainment articles for the online magazine, Society19 as well as news articles for Ffotogallery.

Graham Norwood

Reviewed by Graham Norwood

Property Journalist and Editor,

With over 15 years of experience in residential property journalism, Graham is currently the editor for both Estate Agent Today and Letting Agent Today.