What is a leasehold property?

This guide primarily covers leasehold properties in England and Wales, but it also contains some information for leaseholders in Scotland and Northern Ireland.

What does leasehold mean?

Quick leasehold questions:

What is a 'commonhold' property?

Commonhold is the third – much rarer – type of property tenure in England and Wales.

Essentially a form of community ownership where an apartment building is divided into 'freehold units', each flat offers its own freehold, while common areas (stairwell, walls, roof etc) are managed by a commonhold association, itself owned by the flat owners.

Introduced in 2004, commonhold has so far failed to take off. In March 2025, the Government signalled its intention to spark new life into the commonhold model.

Differences in Northern Ireland and Scotland

Here is how property tenure differs in the other parts of the UK:

• Northern Ireland. It's a similar situation to England and Wales so this guide can help with the basic principles, but there may be nuances in legislation and definitions.

• Scotland. Flats are sold on a similar basis as commonhold properties. Flat owners have their own freehold and common areas are looked after by a paid for 'factor' (company).

Steer clear of leases around 80 years in length

Leases below 83ish years in length should ring ALARM BELLS

A lease with a really decent length – think 100 years or longer – can easily add £1,000s or even £10,000s to the value of a leasehold property.

On the other hand, a lease that's under 80 years in length is considered dangerous territory. That's because lenders may be unwilling to give you a mortgage on a leasehold property which has a lease shorter than 80 years, in turn making it difficult to sell or remortgage.

This is why it can become necessary to extend a lease. But extending a lease is often expensive and complicated, and the price goes up the fewer years a lease has left on it.

If you're buying a leasehold property, information about the length of the lease should be provided by the seller. If you're unsure, speak with your conveyancing solicitor.

We want to sear a point onto your brain...

The magic number of years at which leases become much pricier to extend is:

Once a lease drops below 80 years – even by just one day – the freeholder can rake in the cash. That's because after that you'll pay 50% of the property's 'marriage value' (the extra value a lease extension would add to the property) on top of the lease extension price.

If your home's lease has 83 years left, you should really start looking to extend the lease.

If you're buying a leasehold home alarm bells should screech if the lease is near (or below) 80 years – don't just accept promises of easy extensions from sellers and estate agents.

Here are some general traffic light principles about lease lengths:

🔴 Lease of fewer than 80 years – warning, you're in the danger zone. Urgently think about extending your lease if it's near to 80 years. Under 80 years you'll pay 'marriage value' to extend the lease; under 70 years you'll get more expensive mortgage rates; under 60 years your property will be virtually unmortgageable (so you'll struggle to remortgage).

🟠 Lease of 83ish years in length – it's time to consider your options. Leasehold homeowners should start thinking about extending their lease once it gets to 83ish years.

🟢 Lease of 90+ years in length – no need to worry (yet). If there's more than 90 years remaining, the value added to a flat of extending the lease may only be a smidgen more than the costs – see potential added values in our table below. Having said that, who knows what little things can sway people to pay more for one property than another.

The cost of extending a lease rockets when it hits 80 years

This table shows how much it can cost to extend a lease. See how this becomes much more expensive to do once a lease drops below 80 years in length (even by just one day).

For example, the difference in price between extending an 85-year lease and a 79-year lease is roughly £8,000, while this difference jumps to £15,000 if the lease is 70 years long.

See our How to extend your lease guide for more on the lease extension process.

Common problems with leasehold

Escalating ground rents

Some leaseholders have to pay ground rent, an annual sum (or 'rent') to the freeholder. 

Historically this has been a nominal sum, but in recent years some new-build homes have been sold with ground round of £250+, which in the worst cases doubles every few years (meaning a potential bill of £100s or even £1,000s for ground rent).

Some leaseholders have found the terms of their ground rent so punitive that it's made remortgaging or selling their home very difficult. And because ground rent is written into the terms of the lease, it can cost £1,000s in legal fees to have it amended or removed.

As a result, the Government is overhauling the leasehold system to make it easier and cheaper to remove ground rent from a lease. And legislation banning ground rent on new leases took effect in 2022 – meaning new-build leasehold homes can't have ground rent.

Ground rent help:

Expensive service charges

Leaseholders normally pay a regular service charge for the upkeep of common areas in the block or estate. It might also go towards a sink fund to cover the cost of any major works.

Service charges can be a reasonable amount, but we've also heard from people paying £100s, even £1,000s, each year. Like ground rent, service charges are often written into the terms of a lease, and if there's no cap on increases then what you pay can easily spiral.

A 2024 survey by Barclays found only a third of leaseholders recalled being made aware how much service charges would cost them, while only a quarter understood this amount could increase over time (let alone how much their service charge might increase by).

If you pay a service charge, it's important to remember that:

📝 Your lease should explain how the service charge is organised / what can be charged. 

📝 You have the right to ask for a summary showing how the charge is worked out and what it's spent on and see any paperwork supporting the summary, such as receipts.

📝 Service charges must be reasonable and fair, which means leaseholders are able to dispute any charges they think are unfair at a tribunal.

As part of the government's overhaul of the leasehold system, leasehold homeowners will become legally entitled to a regular and transparent breakdown of the service charges levied by their freeholder. Leaseholders will also be able to take over the management of their building more easily, meaning they should have more control over maintenance costs.

Lack of information about cost of extending a lease

As explained, extending a lease can cost £1,000s, sometimes £10,000s.

But in the past buyers of new-build leasehold homes haven't always been given sufficient information about leases and the likely costs involved when extending a lease prior to buying the property. Others weren't made aware their property was even a leasehold...

See our Should I extend my lease? guide for more on how the process works.

Quick question:

New leaseholders rights could help save £1,000s

For years, the Government has been under pressure to take action to help struggling leaseholders and improve the attraction of leasehold homeownership more generally.

As a result, a ground rent ban was introduced in 2022. This ban applies to new leases, essentially meaning new-build homes can't come with ground rent. In addition, the rule preventing leaseholders from being able to extend their lease before they've owned their home for two years has been scrapped – meaning lease extensions can be started sooner.

More importantly, the Government is overhauling the leasehold system to make it cheaper and easier to both extend a lease and purchase a freehold. In brief:

• Leaseholders will be able to extend their lease by 990 years. Currently, you can only extend the lease on a flat by 90 years, on a house by 50 years (and only once).

• Extending a lease will be cheaper – but we don't know by how much yet. Some costs when extending a lease or purchasing a freehold will be capped or abolished, potentially reducing the price by £1,000s.

As mentioned earlier, the new system should also give leasehold homeowners greater transparency over the level of service charge that can be demanded by their freeholder.

However, in November 2024 the Labour Government said the current proposals don't go far enough. So while the broad changes outlined above will likely remain, the decision to rethink means the new leasehold system is unlikely to take effect until at least 2026.

Full details about the proposals can be found in our Should I extend my lease? guide.

I'm planning to extend my lease – should I wait or take action?

This all depends on how urgently you need to extend your lease or buy your freehold.

It doesn't help that there's no clear timescale when the proposed changes to leasehold will take effect. As the overhaul is so complex, it's unlikely to be until at least 2026.

But here are a few general pointers for now:

Be aware it's possible some leaseholders will actually lose out from the changes to the leasehold system. If this happens we'll update this guide, but in the meantime bear this possibility in mind if you are putting off extending your lease.

Should I buy a leasehold property?

It might seem that buying a leasehold property isn't worth the hassle. But far from it. If you've fallen in love with a leasehold property, there's no reason you shouldn't go ahead.

Leases themselves aren't an issue – it's bad leases that are the issue.

Pros of buying a leasehold

There are some pros to buying a leasehold over a freehold, such as:

✅ You shouldn't have to deal with the upkeep and repairs of any communal areas. This will be the responsibility of the freeholder (though do check the terms of the lease).

✅ If you're having any issues, like noisy neighbours, this can usually be dealt with. The terms of a lease normally mean a freeholder can deal with such issues.

✅ Buildings insurance will normally be sorted by the freeholder. Though you'll still have to contribute to the cost – normally in the form of a service charge.

Cons of buying a leasehold

There are some issues that leaseholders may have which freehold homeowners don't:

❌ You might need to pay ground rent or a service charge. Which could be expensive.

❌ You may not be allowed to carry out refurbishments or extensions. This can require consent from the freeholder, and there's no guarantee they'll say yes.

❌ You may not be allowed pets. Some leases or freeholders don't allow them.

❌ You're not always in control of costs. If your freeholder wants to carry out major works, if your lease says you need to share the cost then you'll have to pay your way.

Any other issues should be picked up by your solicitor before you purchase the property, giving you time to change your mind if needed. This is where the primary issue of leasehold lies, in that solicitors and conveyancers haven't always explained the pros and cons.

Leaseholder rights & how to complain

What to do if you have a complaint

Step 1. Speak to other leaseholders (informally)

Other leaseholders may have similar issues to you, so it's worth having an informal chat with neighbours. If they've a similar dispute, you can make a stronger case by complaining together. Or if they've successfully complained in the past, they can advise you.

The Leasehold Knowledge Partnership website could also provide some useful tips.

Step 2. Try to resolve any issues with the freeholder directly

Some disputes, especially those that are relatively minor, may be resolved by setting it out in writing to the freeholder, or even doing so face-to-face.

If your freeholder is an individual, it should be fairly simple to contact them. If the freeholder is an investment company, or an individual with a large portfolio of freeholds, they'll likely have appointed a management company – and that's what you should contact initially.

Step 3. Consult your tenants' association (if you have one)

The freeholder must consult your tenants' association about major work and long-term changes to agreements, so the association may be able to guide you in your dispute.

Quick question:

Step 4. Use a mediation service to settle the dispute

You can use an independent and impartial mediator to act as a 'middleman' between you and the freeholder to try to settle a case without having to take it to tribunal. The decision isn't legally binding, but you have to go down this route before going to a tribunal.

Typically a company offering mediation services will be accredited by a recognised body and will be a solicitor, surveyor or accountant. The Civil Mediation Council has a searchable database of mediators in your area. The cost will be dependent on how much you're claiming in your dispute, but starts at about £75 plus VAT for a one-hour session.

Step 5. Apply to tribunal