Buying a leasehold property: what does leasehold mean — and what lease durations should you avoid?

Your first-time buyer questions, answered.
The vast majority of London flats are sold on a leasehold basis
Daniel Lynch
Ruth Bloomfield23 December 2021

Question: What does leasehold mean?

Answer: Rather like the offside rule in football, no two pundits have identical explanations.

Generally, the term refers to flats, not houses. And the vast majority of London flats are sold on a leasehold basis, so it is something you do need to get your head around.

Christian Warman, of Tedworth Property, describes it as an agreement between a freeholder and a lessee (you!) allowing you to occupy the property for set period of time and subject to the conditions of the lease.

So, although you are buying a property, the building and the land it sits on is owned by someone else - you will, usually, have to pay an annual ground rent to them. Costs vary, and this is something your solicitor should discuss with you.

Beware, ground rents tend to go up over time so what might sound quite reasonable now might be a lot more by the time you come to sell up.

“Leases can have onerous clauses in them, such as an absolute prohibition to make any alterations to the layout of the flat,” warned Warman. “But in reality, a freeholder will normally allow approved alterations in return for a fee. But in general, the lease of a leasehold property will aim to provide harmonious living between different leaseholders in the same building.”

You need to pay close attention to how long the lease you are buying is for. Leases can be extended but this is an expensive process, and it gets incrementally more expensive the shorter it becomes. Warman feels anything less than 80 years is a problem.

Johnson is even more cautious and suggests taking advice if a lease is less than 100 years.

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