What Is a Leasehold Property?

Leasehold matters because a lease has an end date. You own the right to live in the home for the years the lease sets, but not the land it sits on. With a freehold, you own both the home and the land.

Almost all flats are leasehold. A short lease can be hard to mortgage or sell, and expensive to extend. If a lease does run out, the occupier does not automatically have to leave, but their rights and protections are reduced and they need urgent specialist advice.

Article updated: September 2026

How Long do Leases Last?

Leases have historically tended to run for 99 years, but the length depends mainly on what was agreed when the property was first sold. The type of property and where in the country it is can also make a difference.

There are a lot of exceptions to the 99-year rule. For example, in Greater Manchester and Merseyside, terraced houses with 999-year leases and peppercorn ground rents are common. This is because the houses were built on old, large estates, where the respective landowners were unwilling to sell their land for the purpose of freehold housebuilding.

The Guardian calls the leasehold system a relic of the colonial days, and almost all of the former British Empire no longer uses it. England and Wales still use it, and so does Northern Ireland, with some differences. Scotland, however, has its own ownership system, where properties are either freehold or, effectively speaking, shared freehold.

When can a Property be Leasehold?

Flats and apartments, whether they are new builds, in converted buildings or above offices and shops, almost always are and have generally always been leasehold. In other words, if you are buying a flat, in all likelihood, you will be entering into a leasehold arrangement.

Houses are much less likely to be leasehold, although terraced houses in Greater Manchester and Merseyside often are, and some developers have sold houses as leasehold too.

The Ground Rent Scandal

Unfortunately, over the last 15-20 years, we have seen some unscrupulous homebuilders and developers, exploit the system, in what has become known as the Ground Rent Scandal.

Houses are typically sold as freehold and flats as leasehold. This means flat owners may have to pay ground rent to the freeholder. In most cases that ground rent is a very affordable charge. In some it is a peppercorn rent, a tiny nominal charge traditionally used only to enforce the terms of the lease and keep it legally binding.

In the scandal, some homebuilders and developers broke with these norms and started selling houses as leasehold. They wrote ground rents of, for example, £400 per year into the leases. Worse, the leases said that ground rent would increase over time, say doubling every 10 years.

There is a lot that could be said about this story (not least of all the efforts that were made to make sure home buyers didn't understand the detail of what they were signing are jaw-dropping). This Guardian explainer covers the background, but the short version is this: at least 100,000 people ended up trapped in properties, with spiralling ground rents, that they couldn't sell, exactly because of those spiralling ground rents.

The end result of all this? The Leasehold Reform (Ground Rent) Act 2022 limits ground rent to a peppercorn for most new long residential leases granted in England and Wales from 30 June 2022, subject to exceptions. It is not limited to new-build developments, and buying an existing lease after that date does not remove ground rent already required by that lease. Independent legal advice remains essential.

Advantages and Disadvantages for an Investor

As an investor, buying a leasehold can yield a couple of key advantages over a freehold.

The first is that buying a flat (especially in an apartment block) will generally be a more convenient, hands-off investment when compared to buying a house. This is because, while every block is different' they often come with facilities management, cleaning, gardening, maintenance and security.

These services fall under a service agreement and are not covered by ground rent, which pays for no services at all. Freehold properties rarely come with services like these.

The second concerns lease extension opportunities, which we shall go into more detail about in the next section of this article. In short, a lease with few years left can make a property unmortgageable. That can give a cash buyer who knows the lease extension process the chance to buy at a discount and then extend the lease.

Leasehold has a few disadvantages too, and checking the lease for them is part of a solicitor's work before you buy.

The first is ground rent. Most qualifying new long residential leases are restricted to a peppercorn, but older and excepted leases can still require ground rent. Check the actual lease and do not assume that a recent purchase removes an existing charge.

Secondly, there can be extra conditions, connected to the lease. Pet ownership or rules around noise are two possible examples of this. Again, it is a case of knowing what you are agreeing to.

Thirdly, your rights to refurbish your apartment might be restricted by the terms of the lease, meaning that you would require a license to alter to engage in any refurbishment works.

And finally, you don't want to run into trouble regarding the length of the lease. A short lease can be difficult to mortgage or sell and can be expensive to extend. Expiry does not automatically mean the occupier must leave, but their rights and protections reduce, so a lease approaching its end requires urgent specialist advice.

Extending a Lease

In England and Wales, a leaseholder who meets the conditions set out in law has a legal right to extend their lease. The rules differ for flats and houses, and an informal extension can also be agreed with the freeholder.

Under the statutory schemes currently in force, a qualifying flat lease can be extended by 90 years and a qualifying house lease by 50 years, according to the government's leasehold guidance. The former two-year ownership requirement was abolished on 31 January 2025, so a qualifying leaseholder can start a statutory extension or freehold-purchase claim immediately after buying.

A lease extension can give you security of ownership and make the property easier to mortgage, which can add to its value. An extension may also mean the ground rent is cancelled, which brings down costs.

As mentioned already some property investors will buy short-leasehold properties with a view to extending the lease, meaning they can sell at profit but this is not a strategy for beginners in this market.

The Leasehold Extension Process, Explained

The Leasehold Advisory Service or LEASE is an official public body that gives residential leaseholders free initial advice, including on extending a lease.

You'll need a solicitor who specialises in leasehold extension. The Law Society's Find a Solicitor tool can help you find one - search the 'Houses, Property and Neighbours' tab. There is no fixed scale of charges, so ask for estimates first.

It is also advisable to obtain a professional valuation to establish a reasonable cost for the extension. You'll need a surveyor experienced in these kinds of valuations. The RICS Find a Surveyor tool can help here.

A lease can be extended informally on terms agreed with the freeholder or through a qualifying statutory claim. Flat claims follow the Leasehold Reform, Housing and Urban Development Act 1993, while house claims follow the Leasehold Reform Act 1967, so there is not one universal notice or process. A specialist solicitor and valuer should confirm eligibility, serve the correct notice and calculate the premium under the applicable statutory valuation rules; disputed terms or price can be referred to a tribunal.

You may also have to pay what is known as marriage value on a flat claim if the lease has 80 years or fewer left to run on the date the statutory notice is given. Under Schedule 13 to the 1993 Act, marriage value is the increase that the new lease creates in the combined value of the landlord's interest, the leaseholder's interest and any intermediate leases. The landlord's share of it is fixed at 50%. That share forms part of the premium, and it is a share of the statutory valuation uplift, not simply half of any resale profit. Where the unexpired term exceeds 80 years at that date, the Schedule sets marriage value at nil.

The Leasehold Reform, Housing and Urban Development Act 1993 stipulates how marriage value should be calculated, and that it should be shared equally between the leaseholder and freeholder. The Leasehold Advisory Service explains how it is calculated according to the law in its marriage value explanation for flats. Those are the flat rules: a house claim follows the separate Leasehold Reform Act 1967 regime described above, including its 50-year extension right, and is not valued under Schedule 13.

The Leasehold and Freehold Reform Act 2024 contains future changes including 990-year statutory extensions and the abolition of marriage value, but those valuation and extension reforms are not yet in force. The government's current implementation explainer says further legislation and implementation work are still required, so the current 50-year and 90-year terms and current marriage-value rules continue to matter for claims made now.

Summing Up

It's clear that buying or investing in a leasehold property involves many more considerations than buying a freehold property. So always be sure to ask your conveyancer or solicitor to explain the terms of the lease to you in detail. Reading the lease is one piece of doing due diligence on property, along with checking the home suits the tenants you want to attract.

That said, there is no reason why a leasehold property shouldn't make a perfectly good property investment - as long as you know exactly what conditions and costs the lease involves and that all the numbers still stack up.

The lease checks above apply equally to any leasehold flat on our investment property, buy to let property for sale and below market value properties pages.

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