Leasehold explained: buying and selling with a lease

What leasehold means

When you buy a leasehold property, you buy the right to occupy it for a fixed number of years, set out in a document called the lease. The freeholder, usually called the landlord, owns the building and the land, and the lease sets out what you and the landlord must each do. Flats are usually leasehold, and some houses are too.

Leasehold transactions take longer than freehold ones because more documents and more people are involved: the landlord, often a managing agent (a company paid to run the building) and sometimes a residents' management company owned by the flat owners. A leasehold purchase or sale often takes 12 to 20 weeks from instruction (appointing your conveyancer) to completion (the day ownership passes). Knowing the moving parts helps you budget properly and avoid surprises after you move in.

This guide covers England and Wales. The rules in Northern Ireland are different, so ask your conveyancer what applies there.

The lease term and why short leases matter

Every lease runs for a fixed term from a start date, for example 99, 125 or 999 years. What matters is how many years remain: a 99-year lease that started in 1990 has about 63 years left in 2026, and the number falls every year.

Short leases matter for two reasons. First, lenders set minimum terms, often counting the years that will be left when the mortgage ends, and many become cautious once a lease falls below about 80 to 85 years. Second, value: as the term shortens, the flat becomes harder to sell and extending the lease costs more.

Under the rules that have applied for many years, once 80 years or fewer remain, the price of a formal extension usually includes marriage value, an extra amount reflecting part of the increase in value that the extension creates. If you are buying a flat with, say, 75 years left, raise it with your conveyancer and lender early. A seller can often start a formal lease extension before the sale and pass the benefit to the buyer; see lease extensions explained.

Ground rent and service charges

Ground rent is a yearly payment to the landlord under the lease. Many older leases set a fixed sum, but some increase over time, for example doubling every 25 years, which can put off lenders and future buyers. Your conveyancer checks how the rent is worked out and when it changes. For most new long leases of homes granted from 30 June 2022 (1 April 2023 for retirement homes), ground rent is limited to a peppercorn, which in practice means no money is payable.

A service charge is your share of the cost of running the building: insurance, cleaning, repairs, lighting, lifts and contributions to a reserve fund, which is money set aside for big future jobs such as a new roof. As an example, a flat might have a service charge of £1,800 a year, paid in two instalments. The amount can change each year, and major works can lead to large one-off bills.

Your conveyancer checks what the lease allows the landlord to charge, what has been charged recently and whether big projects are planned.

The management pack

When a leasehold property is sold, the seller's conveyancer asks the landlord or managing agent for a management pack, sometimes called an LPE1 after the standard enquiry form it answers. It covers service charges, ground rent, insurance, planned works, disputes, fire safety and what the landlord needs from the buyer on completion.

The managing agent charges its own fee for the pack, which the seller usually pays. The fee is set by the agent, not by the conveyancer, and varies widely. Packs can take several weeks to arrive, so it is wise to order one as soon as you accept an offer.

On a purchase, your conveyancer reads the pack alongside the lease. Typical concerns include service charge arrears, a reserve fund that looks small for the age of the building, or a roof replacement that will be billed to leaseholders next year.

Building safety in blocks of flats

Since the Grenfell Tower fire, lenders and buyers look closely at fire safety in blocks of flats, especially external walls and cladding. Your conveyancer will ask about fire risk assessments and any remediation (repair) work, and your lender may want evidence about the external walls before it lends.

In England, the Building Safety Act 2022 protects many leaseholders in buildings of at least 11 metres or five storeys. Owners of a qualifying lease, one that meets the conditions for protection, cannot be charged for fixing or removing unsafe cladding, and the other historical safety costs they can be asked to pay are capped. Whether a lease qualifies depends on the position on 14 February 2022, such as whether the flat was the owner's main home or how many UK properties they owned, and the protection passes automatically to later buyers.

Two documents show the position. The leaseholder deed of certificate is completed by the leaseholder and signed in front of an independent witness, to show whether the lease qualifies. The landlord's certificate is provided by the landlord and shows who is liable for the costs.

If you are selling a flat in a taller building, complete your deed of certificate early; the Leasehold Advisory Service explains how. The arrangements in Wales are different, so ask your conveyancer what applies.

Leasehold reform is being phased in

Leasehold law is changing in stages. Changes are being brought in by the Leasehold and Freehold Reform Act 2024, and some are already in force: for example, since 31 January 2025 you no longer need to have owned a flat for two years before you can claim a formal lease extension. Other parts, including a new way of valuing lease extensions and freehold purchases, are not in force yet: they need regulations, and no start date has been set.

This means advice you read online can quickly go out of date. Your conveyancer will tell you what applies on the date of your transaction, and whether an expected change matters for your plans, for example if you are deciding whether to extend a lease now or later.

Completion and the steps after it

Leasehold completions have extra steps. Service charges and ground rent are usually shared between seller and buyer up to the completion date, an adjustment called an apportionment, which appears on the completion statement. Some leases also require a deed of covenant, a document in which the buyer promises the landlord or management company to keep to the terms of the lease.

After completion, your conveyancer sends the landlord notice of the change of ownership, and of your mortgage if you have one. The landlord or managing agent usually charges a fee for registering these notices, so your quote may show it as an estimate until the actual figure is known. If the flat owners own the freehold through a company, you may also become a member or shareholder of that company.

Checklist: documents and questions

If you are selling, gather these early:

• Your lease and any deeds of variation (formal changes to the lease)
• Recent service charge accounts, the current budget and ground rent demands
• Details of the buildings insurance, which the landlord usually arranges
• Letters about planned major works, disputes or fire safety
• The landlord's consent for any alterations you have made
• Your leaseholder deed of certificate, if the building is at least 11 metres or five storeys high

If you are buying, ask your conveyancer:

• How many years are left on the lease, and will my lender accept it?
• What do the ground rent and service charge cost now, and how can they change?
• Are major works planned, and is the reserve fund adequate?
• Are there restrictions on letting, pets or alterations?
• Which landlord and managing agent fees are confirmed, and which are estimates?

Next steps

Leasehold quotes include a leasehold admin fee and may show landlord or managing agent fees as "To be confirmed". Get an itemised leasehold purchase quote or leasehold sale quote. If the lease is getting short, you can request a tailored lease extension quote, and the law firm confirms its fees in writing before any work begins.