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The Law Society - Conveyancing




Key Facts – What is a Leasehold?

What is a Leasehold?

Unlike a freeholder, as a leaseholder you own the property but not the land on which it is built – that is owned by the freeholder. Ownership of your property is also for a set period and therefore, essentially, it is a right to occupy the property for the length of time remaining on the lease.

You will have a legal agreement with the landlord (sometimes known as the ‘freeholder’) called a ‘lease’. This tells you how many years you will own the property as well as set out the rules which both leaseholder and freeholder must abide by.

Ownership of the property returns to the landlord when the lease comes to an end.


The terms of any Lease are of the utmost importance and it is therefore essential to make sure that the Lease gives you the rights which you need.  The Lease is the document which will, amongst other things, regulate your use and enjoyment of the property.


What it means to be a leaseholder

  • The freeholder will normally be responsible for maintaining the common parts of the building, such as the entrance hall and staircase, as well as the exterior walls and roof.
  • Leaseholders will usually have to pay a service charge and their share of the building’s insurance.
  • Leaseholders normally pay an annual ground rent to the freeholder.
  • Leaseholders have to obtain permission from the freeholder for any majors works carried out at the property.
  • Leaseholders may face other restrictions, such as not owning pets or subletting.
  • If leaseholders do not fulfil the terms of the lease – for example, by not paying the service charge or ground rent, then the lease may be at risk of being forfeited, in other words revert to the freeholder.

Leaseholders have a right to extend their Lease.

There are Acts of Parliament which were passed with the intention of allowing tenants to extend their Leases.  An extended Lease must be paid for, which would involve further legal costs and expenses.  If you intend to extend the Lease, you should try and do this while there are 80 years or more remaining on the Lease. This is a very important time because, as soon as there are less than 80 years left to run on the Lease, the cost of extending the Lease increases dramatically.  In any event, the shorter the Term on the Lease, the greater premium the Landlord will require for extending the Lease.

If you have questions or concerns about your decision to buy a leasehold property, for example if you are unsure whether you will be able to afford the service charge or you are worried about any restrictions which may be included in the lease,  please raise this with us as soon as possible.

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