Leasehold: Your Rights and How to Use Them

When you buy a leasehold property, you buy the right to live there for a fixed period, typically 99, 125, or 999 years. At the end of the lease, ownership reverts to the freeholder (landlord) unless you have extended it.

• ✓You own the flat or house, but not the land
• ✓You pay ground rent and service charges to the freeholder or their managing agent
• ✓You must comply with the lease's conditions, including getting permission for alterations
• ✓The freeholder owns the building structure and common parts
• ✓Short leases (under 80 years) significantly reduce your property's value and make it harder to mortgage

Ground rent is a charge paid to the freeholder. It can range from a nominal £1 (known as a peppercorn) to hundreds or thousands of pounds per year.

• ✓New leases granted after 30 June 2022 cannot charge ground rent above a peppercorn (effectively £0) under the Leasehold Reform (Ground Rent) Act 2022
• ✓Existing leases with higher ground rent are still valid, but the new law prevents them being increased in the same ways
• ✓Freeholders who charge ground rent above the peppercorn on new leases face fines of up to £30,000
• ✓If your ground rent doubles periodically (doubling clauses), this may make your lease difficult to mortgage, seek advice

Service charges cover the costs of maintaining the building and common areas, cleaning, insurance, repairs, management fees. They must be reasonable under the Landlord and Tenant Act 1985.

• ✓You have the right to request a detailed breakdown of service charges within 21 days
• ✓Service charges must only cover costs that are reasonable and actually incurred
• ✓You can challenge unreasonable service charges at the First-tier Tribunal (Property Chamber) in England or the Leasehold Valuation Tribunal in Wales, the tribunal can reduce or disallow charges
• ✓Freeholders must consult leaseholders before carrying out major works costing more than £250 per flat (Section 20 consultation)
• ✓If Section 20 consultation is not followed, you cannot be charged more than £250 per flat for those works

If the freeholder plans major works (a new roof, lift replacement, external decoration), they must follow the Section 20 consultation procedure under the Landlord and Tenant Act 1985:

You have a statutory right to extend your lease under the Leasehold Reform, Housing and Urban Development Act 1993 (for flats) if you have owned the property for at least 2 years.

• ✓Statutory extension adds 90 years to the existing term (so a 75-year lease becomes 165 years)
• ✓The new lease has a peppercorn ground rent (£0)
• ✓You pay a premium to the freeholder, calculated by a statutory formula based on marriage value, ground rent, and years remaining
• ✓Act sooner rather than later, once a lease falls below 80 years, marriage value kicks in and the cost increases substantially
• ✓The Leasehold and Freehold Reform Act 2024 will remove the 2-year ownership requirement and change how premiums are calculated, check current GOV.UK guidance for implementation dates

Leaseholders in a building can take over management of the property without buying the freehold. This is called the Right to Manage under the Commonhold and Leasehold Reform Act 2002.

• ✓At least 50% of leaseholders in the building must participate
• ✓At least two-thirds of flats must be held on long leases (over 21 years)
• ✓No more than 25% of the building can be commercial (non-residential) use
• ✓The freeholder cannot block a valid RTM claim (only challenge it on procedural grounds)
• ✓Once acquired, the RTM company takes over all management functions, but not freehold ownership

If you have a dispute with your freeholder or managing agent, you have several routes: