What To Consider When Buying a Leasehold Property

With a leasehold, you own the property (subject to the terms of the leasehold) for the length of your lease agreement with the landlord.

When the lease ends, ownership returns to the landlord, unless you can extend the lease.

You won’t technically own the property outright, the landlord will continue to own the property and the ground it sits on. Leasehold is commonplace when buying a flat or apartment as it sits within a larger building.


A lease agreement is a legal contract between two parties, a lessor (landlord) and a lessee (tenant), whereby the lessee is granted access to a property for a certain amount of time. There are usually certain conditions attached to this agreement regarding how and by whom the property may be used. Both parties are bound by the terms of the contract, and there is a consequence if either fails to meet the contractual obligations.

The agreement promises the lessee use of the property for an agreed length of time while the owner is assured consistent payment over the agreed period.

Legal Obligations

Leasehold properties come with a list of DOs and DON’Ts. The lease sets out all your responsibilities and obligations – so your lawyer will need to read the lease from start to finish. Make sure you read all the leasehold documentation carefully and understand it. Get a leasehold specialist to explain anything you don’t fully understand. Not understanding can be very costly.

Lease Length

Most leases either start off with a duration of either 99, 125 or 999 years when they are originally granted, however unless you are buying a new build, the lease length will have deteriorated. The shorter the unexpired term, the harder it is to get a mortgage – most lenders will not even consider lending on a property with a lease of less than 80 years. A leasehold property’s value is very much dependent on the number of years remaining on the lease.

Lease Extension

Leaseholders are entitled to extend their lease by 90 years as long as the original lease term was more than 21 years and they have owned the lease for more than 2 years. Leaseholders would have to compensate the landlord and pay their reasonable costs. A lease extension can be expensive, however generally speaking the longer the unexpired term, the cheaper the extension will be. If a lease were to expire – the property would return to the landlord’s ownership.

Lease Restrictions

Check the terms on your lease for any restrictions about what you can do in the property. For example, in a flat, you may not be allowed to have pets or hang your washing out over the balcony.

There may also be things that you need to ask the landlords permission for, such as building projects like an extension or loft conversion. When asking for consent, a landlord should not unreasonably reject the request but you may have to pay them a fee before work can be undertaken.


It is imperative to seek advice from your leasehold lawyer if the flat appears to have been altered or extended since the date of the original lease. Compare the Lease Plan with the estate agent’s plan, and the actual flat, and if there are any differences, make sure the landlord gave written permission for those changes.

Your lawyer will also check that any necessary consent was obtained from the Local Authority in addition to any consents required under the lease, alongside Building Regulations and Conservation Area consent if the building is listed or in a conservation area. Any external alterations or extensions to a flat will generally be impossible or impracticable or costly to get permission for.

Building Management

The landlord may be an external freeholder – or could be a Residents Management Company. In either case, it is usually the case that the landlord will employ a managing agent to do the day-to-day running around and management of the building, including all the financial ins and outs. It’s a reason why buying leasehold is expensive compared to buying freehold – but ensuring you know all the fine detail is important.

Service Charges

Service charges are levied upon leaseholders in order to cover the maintenance costs of the whole building. These are often subject to adjustment when the actual expenditure for the year has been calculated and compared to the budget – which is the case, even if you have paid in advance. You will need to factor in these expenses when deciding if you can afford to buy a leasehold property.


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