In the UK, owning property doesn’t always mean owning the land it sits on. That’s where leasehold comes in – a form of property ownership that’s been under increasing scrutiny and reform.
Leasehold vs Freehold
There are two main types of property ownership in England and Wales: freehold and leasehold.
If you own a freehold property, you own both the building and the land it stands on outright. You’re responsible for maintaining everything.
Leasehold, on the other hand, means you own the property for a fixed period, but not the land. The land is owned by a separate party known as the freeholder (or landlord), and your rights are governed by a legal lease agreement. When the lease expires, ownership of the property reverts to the freeholder unless you extend the lease or buy the freehold.
Leasehold is particularly common for flats, where shared ownership of communal areas makes freehold impractical. However, some houses have also been sold as leasehold – a practice now largely banned under new legislation.
Key Features of Leasehold
Leasehold properties come with a unique set of rules and costs. The lease itself sets out your rights and responsibilities, and it’s crucial to understand what you’re signing up for.
Most leases run for between 90 and 999 years, though older leases may be shorter. A lease with fewer than 80 years remaining can significantly reduce the property’s value and make it harder to secure a mortgage. Extending a lease is possible, but until recently, it could be expensive and legally complex.
Historically, leaseholders were required to pay ground rent – an annual fee to the freeholder with no direct benefit. This practice has now been banned for most new leases under the Leasehold Reform (Ground Rent) Act 2022.
Service charges are another key cost. These cover maintenance of shared areas like hallways, gardens, and roofs. While necessary, they’re often a source of dispute, especially when charges seem excessive or poorly explained. Leaseholders may also face permission fees for making alterations, subletting, or even owning pets – all subject to the terms of the lease.
Recent Legal Reforms
The Leasehold and Freehold Reform Act 2024 marks a major shift in leasehold law, aiming to rebalance the relationship between leaseholders and freeholders.
One of the most significant changes is the extension of standard lease terms to 990 years for both flats and houses. This dramatically reduces the need for future renewals and gives leaseholders greater security.
The cost of extending a lease or buying the freehold has also been reduced. Leaseholders are no longer required to pay the freeholder’s legal costs, making the process more accessible.
Transparency has improved too. Service charges must now be issued in a standard format, making them easier to understand and challenge. The threshold for taking over building management through the “Right to Manage” has been raised – buildings with up to 50% commercial space now qualify, compared to the previous 25%.
New leasehold houses are effectively banned, except in rare circumstances. And freeholders who manage buildings directly must now join redress schemes, giving leaseholders a formal route to challenge poor practices.
Why It Matters
Leasehold ownership has often felt like owning a home with strings attached – from hidden fees to limited control over your property. But with reforms now in place, leaseholders are gaining more rights, transparency, and autonomy.
Still, many homeowners are navigating legacy leases and outdated practices. Understanding the leasehold system, and knowing your rights, is essential to making informed decisions and protecting your investment.
If you would like to discuss anything in this article or wish to speak to our Residential Conveyancing team about a leasehold property, please contact us on 01603 677077 or email info@spiresolicitors.co.uk.
