Leasehold homes: know the lease before you commit

What leasehold means

With a leasehold property you own the right to occupy it for a fixed number of years, set out in a legal document called the lease. The building and the land usually belong to a landlord, also called the freeholder, who may appoint a managing agent to run the building. With a freehold, by contrast, you own the building and the land outright, with no end date.

The lease sets out what you pay and what you can and cannot do. You may pay ground rent, a regular charge to the landlord, and a service charge, your share of the cost of insuring, repairing and managing the building. Some flats come with a share of the freehold, where the flat owners own the building together, often through a company.

Buying a leasehold home

On top of the usual purchase work, your conveyancer reads the lease and reports on points such as:

• how many years are left, because a short lease can be harder to mortgage and costs more to extend
• the ground rent, and whether and how it increases
• the service charge, what it covers, any reserve fund saved for future repairs and any planned major works
• restrictions, for example on letting the property, keeping pets or making alterations
• who insures the building, and any building safety information you or your lender need

Much of this comes from the management pack, a set of documents and answers supplied by the landlord or managing agent. Your lender has its own requirements for leases too, and your conveyancer checks the lease against them. A leasehold purchase quote includes all of this extra work.

Selling a leasehold home

Buyers cannot usually exchange contracts, the point where the sale becomes legally binding, until they have seen the management pack. That makes it one of the first things to order. The landlord or managing agent sets the fee, which the seller usually pays.

You will also need the lease, recent service charge and ground rent statements, and details of any major works, disputes or alterations. On completion, the service charge and ground rent are usually shared out so that each side pays for its own time. For example, if you have paid a year's service charge in advance and complete halfway through that year, the buyer would normally refund you about half.

A leasehold sale quote shows the full cost of selling.

The extra costs to expect

A leasehold costs more than a freehold because there is more to check and more people to deal with. Your quote shows:

• a leasehold admin fee, added to the legal fee
• fees set by the landlord or managing agent, for example for the management pack, for registering the new owner or mortgage with them, and for any deed of covenant, a document in which a new owner promises to keep to the lease or the management company's rules
• VAT, where it applies

Landlords' fees vary widely and are not known until they are requested, so your quote marks them to be confirmed rather than guessing. When buying, also budget for the service charge and ground rent from the day you complete, and ask whether large bills for major works are expected.

Changing your lease

Some leasehold work is not part of a sale or purchase. Each of these gets a tailored quote prepared by our team, usually within one working day:

• a lease extension, which adds years to your lease
• buying the freehold, on your own for a house or together with other flat owners
• a deed of variation, which changes the wording of a lease, for example to correct a mistake
• staircasing, which means buying a bigger share of a shared ownership home

Changes are being brought in by the Leasehold and Freehold Reform Act 2024; your conveyancer will tell you what applies on the date of your transaction. Our lease extensions guide explains the options, and the government funded Leasehold Advisory Service offers free advice for leaseholders in England and Wales.

How long it can take

A leasehold purchase or sale commonly takes 12 to 20 weeks from instruction to completion, compared with 10 to 16 weeks for a freehold. Most of the difference is time spent waiting for the management pack and for answers to follow-up questions from the landlord or managing agent.

A leasehold remortgage often takes 4 to 8 weeks once the mortgage offer is issued, provided the lease meets the new lender's requirements. Lease extensions and freehold purchases follow their own timetables, which your conveyancer will explain.

Common pitfalls

Watch out for these:

• Ordering the management pack late when you sell.
• Finding a short lease, or a ground rent that rises steeply, only after paying for a survey and a mortgage valuation.
• Not budgeting for major works already planned in the management pack.
• Alterations made without the landlord's consent, which a buyer's conveyancer will ask about.
• Assuming you can let the property, run a business from it or keep a pet without checking the lease.
• Treating landlords' fees as fixed before they have been confirmed.

Next steps

Get a quote for the leasehold transaction you have in mind. Alongside purchases and sales, there are instant quotes for a leasehold remortgage and a leasehold transfer of equity, which adds or removes an owner.

Our leasehold guide has a practical checklist to work through before you instruct. When you ask to go ahead, we introduce you to a regulated law firm that handles leasehold work in your area and can act for your lender.