Leasehold is a uniquely British — and uniquely complicated — form of property ownership. It is also the dominant tenure for flats across London, including in Canary Wharf, Greenwich, Hackney and virtually every other inner-London borough. If you are buying a flat in London, you are almost certainly buying leasehold. Here is what you need to understand before you sign anything.
What Is Leasehold?
When you buy a leasehold property, you are buying the right to occupy it for a fixed period — the lease term. You do not own the building itself (that belongs to the freeholder). The lease is a contract between you (the leaseholder) and the freeholder, and it sets out your rights and obligations — and theirs.
The fact that you don't technically own the building matters more than you might think. Everything from making alterations to subletting to keeping a pet may require the freeholder's written consent — and they may charge for it.
The Most Important Number: Lease Length
The single most important thing to check when buying a leasehold flat is the remaining lease length. This is crucial for two reasons:
- Mortgageability — most mortgage lenders will not lend on a property where the lease will have fewer than 70–85 years remaining at the end of the mortgage term. In practice, most lenders want to see at least 90 years remaining at the point of purchase.
- Cost of extension — once a lease drops below 80 years, the statutory cost to extend it increases significantly due to the addition of "marriage value". This can add tens of thousands of pounds to the extension premium.
The 80-Year Cliff
If you are buying a flat with a lease of 85 years, it may seem fine today. But in five years, when you want to sell, it will have dropped to 80 years — right at the point where extension costs escalate sharply and some buyers and their lenders will refuse to proceed. Always buy with at least 90 years on the lease, or factor the cost of a lease extension into your offer.
Service Charges
As a leaseholder, you will typically be required to pay a service charge — a contribution to the cost of maintaining and managing the building. Service charges can vary enormously:
- Small, self-managed blocks: £500–£2,000 per year
- Typical managed developments: £2,000–£6,000 per year
- Premium Canary Wharf buildings: £8,000–£18,000+ per year
Critically, service charges are variable — they can increase significantly from year to year. Always request the last three years' service charge accounts from the managing agent before making an offer.
Ground Rent
Ground rent is a payment made by the leaseholder to the freeholder, simply for occupying the land. Historically, ground rents were peppercorn (nominal) amounts. From the 2000s onwards, many developers started inserting "doubling ground rent" provisions — where the ground rent doubles every 10 or 25 years.
Ground rents that double regularly can reach enormous levels over time, making a property unmortgageable and very difficult to sell. The Leasehold Reform (Ground Rent) Act 2022 abolished ground rents for new residential leases in England and Wales — but older leases with doubling provisions are still a major issue for buyers of second-hand properties.
Major Works and Section 20
If the freeholder plans significant works to the building — a new roof, replacement lifts, fire safety remediation — they must consult leaseholders under the Section 20 process. Leaseholders may receive bills for major works running to many thousands of pounds — sometimes with relatively little warning.
Always ask the managing agent whether any major works are planned or being considered in the next 3–5 years.
Leasehold Reform: What's Changing?
The Leasehold and Freehold Reform Act 2024 has made significant changes to leasehold law in England and Wales, including extending the standard lease extension term to 990 years and restricting ground rents. The law continues to evolve rapidly in this area, so always get up-to-date legal advice from a solicitor who specialises in leasehold conveyancing.
Questions to Ask Before Buying a Leasehold Flat
- How many years are left on the lease?
- What is the current ground rent and how does it escalate?
- What are the service charges — current and historic?
- Are there any planned major works (and associated costs)?
- Is there a sinking fund — and how much is in it?
- Who is the freeholder and are they responsive?
- What are the restrictions in the lease (pets, subletting, alterations)?
- Are there any ongoing disputes between leaseholders and the freeholder?
Buying a Leasehold Flat in London?
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