Leasehold
Leasehold Buyer Guide
Most flats in England and Wales — and a growing number of houses — are sold on a leasehold basis. You own the property for the term of the lease, but the building and land sit with the freeholder. Get the diligence right and leasehold can be straightforward; get it wrong and it can be ruinous.
8 min read · First-draft content — review before publication
Lease length is everything
- Above 125 years — generally fine, mortgageable on standard terms.
- 80–95 years — start budgeting for an extension; lender choice begins to narrow.
- Below 80 years — 'marriage value' applies, extensions get materially more expensive, mortgage choice shrinks.
- Below 70 years — most lenders will decline. Negotiate a price reduction or insist the seller extends before completion.
Ground rent and service charges
Ground rent is a small annual sum paid to the freeholder — but historic leases with doubling clauses can become unmortgageable. The Leasehold Reform (Ground Rent) Act 2022 restricts new leases to a peppercorn (effectively zero) rent. Always check the existing lease's review clauses.
Service charges fund the upkeep of the building and communal areas. Ask for the last 3 years of accounts, the reserve fund balance, and details of any planned major works (Section 20 notices). A pending re-roof or cladding remediation can run into tens of thousands per flat.
Cladding and EWS1
For mid-rise and high-rise blocks built or refurbished in the last 30 years, lenders may require an EWS1 form confirming the external wall system. The Building Safety Act 2022 has shifted much remediation cost away from leaseholders, but check the current status before exchanging.
Your statutory rights
- Lease extension — after 2 years of ownership you can compel a 90-year extension at peppercorn ground rent (subject to premium).
- Right to manage (RTM) — leaseholders can take over management of the building from the freeholder.
- Collective enfranchisement — leaseholders can buy the freehold together.
- First-tier Tribunal (Property Chamber) — challenge unreasonable service charges.
Ask your solicitor for an LPE1
The Leasehold Property Enquiries (LPE1) form gives you the lease terms, charges, arrears and major works pipeline in one document. Read it before exchange.