Living in Leasehold Property

What is leasehold?

Leasehold ownership of a flat is a long tenancy. That is, the right to occupy and use the flat for a period of time – typically for 99 to 125 years. The exact “term” of the tenancy is set out in the lease, which decreases yearly. Therefore, the value of the flat tends to diminish over time until the lease expires.

Leaseholders own and are responsible for everything contained within the walls of the flat such as the floorboards and plaster to the walls and ceiling. What is owned by the leaseholder is usually defined in the lease as the “Demised Premises”. A garden can also be included in the leaseholder’s ownership, unless it is communal.

The structure and the communal areas of the building are owned by the landlord who is also responsible for the maintenance and repair. In most cases, the landlord is the freeholder too. That is, they own the land that the building stands on. It is common for leaseholders to collectively own the freehold through a Residents Management Company or alternatively, to manage the building as if they own the freehold.

What is a lease?

The lease is a contract between the leaseholder and the landlord which includes the conditions under which the leaseholder owns the flat for a fixed length of time. It sets out the contractual obligations of both parties such as the payment of ground rent (if any), the contributions to the costs of maintaining and managing the building through service charges and more.

Being a leaseholder does not mean that you are entirely free to do whatever you want with the flat as the lease comes with conditions on its use and occupation such as the permission to have pets. Moreover, changing the conditions of the lease after the purchase is difficult, for this reason it is important that leaseholders fully understand the content of the lease before they sign it. Therefore, it is highly recommended that they ask advice from a solicitor to ensure that they want to accept the obligations imposed in the lease. In the event that a property is sold to another leaseholder, the seller then passes on all the rights and responsibilities that come with the lease to the buyer.

HML can provide support and advice to leaseholders so that they ensure they are able to fulfil their obligations according to their lease. Moreover, we are here to answer any pre-sales and re-mortgage enquiries and help in the facilitation of the Lease Extension process.

Service Charges

The maintenance and repair of a building is usually the landlord’s responsibility. Additionally, landlords may also take care of the insurance for the building, the provision of central heating, lifts, porterage, estate staff, lighting and cleaning of the communal parts.

Leaseholders are obliged to pay their landlords for these services and in some cases, the charges might also include the costs of managing the building either by the landlord or by a professional managing agent. The lease sets out in detail all service charges that may be imposed to leaseholders by landlords, the cost of which may vary from year to year.

According to some leases, landlords have the right to collect estimated service charges in advance, while leaseholders may challenge service charges that they feel are unreasonable at the First-tier Tribunal (Property Chamber).

Before purchasing a leasehold flat, it is advisable to find out what is the current cost of services and if there are any major works planned that could require any reserve funds or affect the service charge in the near future.

Useful pages

You may come across certain terms associated with leasehold. To help you have a better understanding, we have compiled a glossary of commonly used terms together with their definitions.