New Mortgage Guides

Other Mortgage Guides

Mortgage Types

Mortgage Tools

Financial Services > Mortgages > Leasehold Property > Buying leasehold property

Buying Leasehold Property

Buying a leasehold property

When looking for a new property you need to check whether the ones you are considering are leasehold or freehold. Many home buyers don’t understand what a leasehold is, how it works, the rights it gives and the responsibilities that it entails.

This is the guide to leasehold properties.

For those people who are buying, or are considering buying, a leasehold flat or house it is essential to know what owning a leasehold home entails. Flats are more often sold on a leasehold than houses.

Apart from the cost of buying your home, leaseholders will have to pay ground rent and service charges which includes building insurance.

What is a leasehold property?

Leasehold flats may be in purpose-built blocks, converted houses or part of commercial or retail premises. Leasehold houses are much rarer but are often in a street or development of houses which all come under the same freeholder. In the case of houses, many owners have since bought the freehold.

Leasehold ownership of a flat fundamentally means a long tenancy - the right to own, occupy and use a flat for a long period known as the 'term' of the lease.

This can be up to 999 years but can be just a few short years in some cases.  Within that period, the flat can be bought and sold. From the outset of the lease, the term is fixed, and decreases every year. At the end of the lease, the flat is returned to the owner of the building. Look out for the terms 'long' lease and 'short' lease on the property details which refer to the number of years left on the lease.

Even though a leaseholder owns the property on a lease, the owner of the freehold retains ownership of the external and structural walls, as well as any common parts of the structure. The owner of the building is also responsible for the maintenance and repair of the building.

Leasehold properties may be owned by either individuals or companies, and sometimes by housing associations or local authorities.

Often, leaseholders get together to purchase the freehold of the building in which they live by creating a residents’ management company.  At least half the leaseholders have to agree for you to be able to go ahead but if there are only two flats in the property – which is typically the case with a converted house – then both owners have to agree.

Alternatively, you can buy an extension to your lease which is often necessary once it falls beneath about 80 years. Whether buying the freehold or extending the lease, you will have to negotiate to agree a price.  

What is a lease?

In the eyes of the law, a lease refers to a specific contract that exists between the owner of a property and a leaseholder that provides the latter with conditional ownership for a fixed period of time.

Leases are extremely important documents, and both parties should keep a copy of the agreement and make sure that it is understood. Leases are usually worded in legal jargon so it's advisable to consult a lawyer or solicitor before going ahead with your purchase as they can sometimes contain unusual clauses.

Leases lay out the contractual obligations of both parties: the leaseholder and the freeholder. The lease sets out the leaseholder’s obligations as well as any restrictions and conditions regarding the property. Usually, the landlord is required to maintain and manage the structure of the property, as well the outside and any common areas.

Leaseholders may not be totally free to do what they wish with the leasehold property. The restrictions can be major or minor. For instance, you may need permission from the freeholder before knocking down internal walls or having a pet. The conditions of the lease are intended to protect the rights of all those with an interest in the building.

When a flat is sold, the seller passes all the rights and responsibilities of the lease to the purchaser, including all future service charges.

Receive Mortgage Advice from a Regulated Advisor

Mortgage advice

There is no better time to be seeking suitable mortgage advice from a Regulated mortgage advisor

Submit your details today for an obligation-free chat and a regulated mortgage advisor will call you back to help you find the mortgage that best fits your needs.

We will only provide your details to one regulated advisor.

Your mortgage

 * Help
 * Help
 * Help

About you


Questions marked with * are required

Please be aware that the advisor who contacts you will be a third party advisor who has no connection with us. There is no charge to you for using this service. We are paid by charging your assigned advisor a fee for this service. Any advice or assistance given to you by a third party advisor does not represent our advice or assistance and is not checked or endorsed by us. It is your decision whether or not you act on any advice or assistance you are given.

By clicking “Proceed” you confirm that:

  • You accept our Terms of use and
  • You would like to be contacted by a regulated third party advisor to discuss your needs.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Financial Services Net Limited and other trusted 3rd parties would like to keep you advised via e-mail or telephone of products, services and other exciting offers we think may interest you. Please untick this box if you do not consent to us contacting you for further information.

news news rss
Mortgages News

Mortgage approvals up by 33% at mutuals

Leeds pulls lowest-ever 1.99% deal after less than a month

First direct slashes rates by up to 0.5%

Mortgage lenders

Browse mortgage lender offersMortgage Rates by Lender

  • Browse current mortgage offers from over 90 lenders.

Worried about mortgage repayments?Worried about Mortgage Repayments?

  • Join our petition to Government to bail out burdened individuals, not just banks.

Free mortgage quoteFree Mortgage Quote

Mortgages in Scotland Mortgages in Scotland

Equity releaseEquity Release

  • Unlock equity in your home.

Switching mortgagesSwitching Mortgages

Home reversion plansHome Reversion Plans

Commercial mortgages Commercial Mortgages

  • Commercial property loans
  • Starting a business?

Arrears & CCJs?

  • Remortgages
  • Sub prime mortgages
  • Arrears, CCJs
  • Self certification
  • Debt consolidation

Protect your mortgageProtect Your Mortgage

  • 3 months free mortgage protection cover

Mortgage Newsletter