Leasehold guide

The Mayor of London’s leasehold guide for Londoners

The Mayor has created this guide to make the process of buying a leasehold property easier to understand. 

The Mayor recognises that many Londoners who buy their home on a leasehold basis encounter difficulties and confusion, so he is calling on government to reform leasehold and move to a fairer system of tenure. In the meantime, this guide aims to make sense of the current system. 

On this page you’ll find frequently asked questions for those who are new to leasehold, information for current leaseholders and a glossary of useful words and phrases.

Select from the following:

Please be aware, this guide is just a starting point: you should always seek professional advice from a solicitor or conveyancer when dealing with complex leasehold issues. If you’re renting a property privately, you should look at our advice for renters pages.

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General questions

Information for those who are new to leasehold, explaining the key people and relationships involved in leasehold ownership.

How do I know if I’m a leaseholder or a freeholder?

If you own a property you should have been told when you bought it whether it was on a leasehold or freehold basis. You can find out if your ownership is leasehold or freehold in the legal documents from when you bought the property. If you can’t find them, you could look up your property via Land Registry.

Generally, flats in London are sold on a leasehold basis and most houses are freehold. However, there are exceptions.

What is the difference between leasehold and freehold?

Freehold is where a person or organisation has outright ownership, forever, of a property and the land it’s built on.

Leasehold is a long-term tenancy where someone buys the right to live in a property for a certain period, usually 99 or 125 years. Unless the leaseholder makes arrangements to extend it, once the lease ends, ownership of the property returns to the freeholder. As a leaseholder, if you own a property in a block of flats, you don’t own the land the property sits on. This is owned by the freeholder of the property. Leaseholders usually pay ground rent too.

The rules a leaseholder must follow are governed by a contract, known as the lease. It can include restrictions on what they can do to a property. For example, whether they can have pets and whether they can rent the property out.  The lease will also detail the leaseholder's rights. These may include, for example, the right to use the common parts or gardens, or to park a car in a shared car park.

In London, leasehold is most common as a tenure to sell flats. However, some houses are also leasehold, although this is more common outside of London.

What is the difference between leasehold and renting?

The main difference between leasing and renting a property is the length of the contract. Leasehold is usually granted for at least 21 years and can last as long as 999 years. Renting residential property is usually on a short-term basis through a contract called an assured shorthold tenancy (AST). This typically lasts around a year. 

Leasing a property is usually called buying the property, whereas ASTs are called renting. Generally, a tenant renting on shorter term contract (such as an AST) can be evicted without the landlord needing to prove a fault based ground for possession. In comparison, a leaseholder on a longer form contract has the rights to remain in the property for the full term assuming the lease is not breached. The landlord (usually the freeholder) should only be able to evict the leaseholder if they can prove the lease has been breached, though this is very rare.

This page is about leasehold properties. If you’re renting a property privately, you should look at our advice for renters pages.

What is the difference between a landlord, a residential management company, and a residential managing agent?

All buildings are owned by a landlord, typically on a freehold basis, who has certain responsibilities to its leaseholders. Many buildings also have a residential management company, who is party to the lease, and who also has legal obligations to the leaseholders to provide services.

In many cases, a landlord or residential management company will not carry out these services or duties themselves but will appoint a residential managing agent to do so on their behalf.

What does a residential management company do?

Not all buildings have a residential management company. Where the freeholder is a council or housing association, for example, buildings typically do not have one. However, where one exists, it will be a party to the lease and responsible for providing services and keeping the building in repair.

In cases where there is a residential management company, leaseholders will typically each own a share or be a member of it. If you buy a lease of a flat in a scheme with a residential management company, the seller will usually transfer their share to you. 

Leaseholders have the legal right to set up their own, alternative, residential management company. This is called the ‘Right to Manage’, and leaseholders can exercise it whenever they want as long they meet the criteria set out in law. Find out more about Right to Manage.

The residential management company usually appoints a residential managing agent to manage the scheme on its behalf. Landlords often have rights to manage the building and provide services, if the management company is dissolved or fails its duties under the lease.

What does a residential managing agent do?

A residential managing agent is a person or company appointed by the landlord or residential management company to manage the building. They are not legally responsible for management and repair of a building in the lease but are often hired to carry out these duties in a building on behalf of its landlord or residential management company. Their role is to make sure that the landlord, residential management company, and leaseholders follow the terms of the lease.

Is my landlord and the freeholder the same person?

Your landlord is the person who you pay ground rent to, as set out in your lease. Often, your landlord will be the building freeholder too. However, some buildings may have an intermediate lease which could mean that your landlord is different to your building freeholder. 

In buildings where leaseholders have collectively bought the freehold (also known as collective enfranchisement), the freeholder will usually be a company in which all leaseholders have a share.

Your lease may detail who you should contact to discuss day-to-day issues such as repairs and alterations to the property. In many cases this will be a residential managing agent, employed by the landlord. If you don’t have a copy of your lease, contact the person who you pay service charges or ground rent to.

If you’re renting your property from a private landlord, different rules apply. See our advice for renters.

What is shared ownership?

Shared ownership is a type of affordable housing. You buy a share of a lease in a property, usually with a mortgage, and pay rent to a landlord on the remaining share. Your landlord will usually be a housing association.

For example, you might have a 50 per cent share in (a lease of) a property. You would then pay the landlord a monthly rent on the remaining 50 per cent. As a leaseholder, you can choose to ‘staircase’ up your share. This means gradually increasing the proportion of the home that you own, and therefore paying less rent on the remainder. Shared owners should consider the additional costs involved in staircasing when buying the property as they will need to pay legal and valuation costs. Shared ownership leaseholders will also usually pay any service charges in addition to, or as part of, their monthly rent.

A shared ownership lease differs from a typical long lease. For instance, as a product to help first time buyers onto the property ladder, shared ownership leases usually restrict subletting. This stops them from being bought as ‘buy-to-let’ properties.

As a shared ownership flat leaseholder, lease clauses like paying monthly rent and restrictions on subletting fall away once you have staircased up to 100 per cent. If you have a shared ownership house lease, you’re usually transferred the freehold following staircasing up to 100 per cent, but not always. 

In London, households are only eligible for a shared ownership property if they are first-time buyers and their income is less than the household income limit set by national government of £90,000. The Mayor funds shared ownership homes as part of his Affordable Homes Programme 2016-22.

Read more on shared ownership on our blog and find a shared ownership home to buy by registering for updates and seeing what is currently available on the Mayor’s Homes for Londoners portal.

What is the First-tier Tribunal?

The First-tier Tribunal (Property Chamber) has the power to deal with certain disputes or issues with leasehold property, and other property issues. Leasehold issues you can take there include service charges disputes, right to manage applications, and disputes around lease extensions and enfranchisement.

Most tribunal cases are subject to an application fee and a hearing fee, once a date is set for the hearing. Government has a list of forms for tribunal applications and details on fees are on the LEASE website. You don’t have to have legal representation at the tribunal, but it may help you. You should know you may be required to pay some or all the freeholder or landlord’s legal fees after the hearing. 

You could also try mediation for your case. This is where the two parties meet with a mediator who helps them to clarify the issues and try and reach agreement. Mediation will still cost money but may be cheaper and quicker than a tribunal. 

The LEASE website has more information, including on types of case. 

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I’m buying a leasehold house or flat

Information for Londoners who are thinking about buying, or are about to buy, a leasehold house or flat.

What should I look out for in a lease?

You should always seek independent legal advice from a solicitor or conveyancer before agreeing the terms of a lease. It may be expensive, but it’s a small part of the overall property cost. It’s important that the lease you sign does not include terms which might cause you problems in future.

You should always read the lease before signing. You should also ask a solicitor to advise you on certain aspects including:

  • service charges, including how they are calculated, billed, and paid
  • ground rent, including whether it will increase over time
  • whether there are any major works planned and if there is a sinking fund
  • who is responsible for insurance, repairs, and major works
  • restrictions, such as to making alterations, subletting, and on pets 
  • any other obligations on the part of the leaseholder or freeholder

The LEASE website has a quiz on leases which shows you what to look for in a lease.

What are service charges and what is reasonable to pay?

These are charges set by landlords to pay for providing services to maintain a building like a block of flats – such as cleaning communal areas like gardens, maintaining lifts, and cleaning windows.

The service charge often includes overall building insurance. However, this does not include the costs of insuring the inside of an individual leaseholders’ flats or home contents. What is covered by each building’s service charge and building insurance will differ, so you should check what is covered by yours.

The cost of service charges will vary depending on the type of building they are being charged on. The Association of Residential Managing Agents (ARMA) estimates the average flat owner in London pays £1,800 to £2,000 a year in service charges. However, this can be higher or lower depending on the age of the building and how service charge is divided between leaseholders.

Service charges are generally variable. This means that they will change over time in line with actual costs. In practice, a landlord (or management company) will set an estimate for the year ahead and charge accordingly. They will then calculate the difference between this and actual costs when the financial year ends and charge or repay any difference to leaseholders.

Your service charge contribution will be a proportion of the overall service charge costs. The lease usually states the leaseholder will pay a ‘reasonable and fair proportion’ or a set proportion. This could be one tenth if there were 10 flats of equal size, for example.

However, service charges must only be charged in accordance with the lease and where ‘reasonable’ in accordance with the law.  The key legal requirement is that costs must be ‘reasonably incurred’ and the service or works must be of a reasonable standard.  You can challenge the reasonableness of service charges in the First-tier Property Tribunal.

The Mayor has been working with housing providers to ensure their service charges for shared owners are fair, transparent, and affordable. He has created a Shared Ownership Charter for Service Charges for housing providers City Hall funds to build homes. 

What is ground rent?

Ground rent is a fee set by the freeholder, separate from service charges, that the leaseholder pays as a condition of the lease. This is usually paid yearly by the leaseholder to the freeholder, but how this is paid varies. The cost of a ground rent will be written in to the lease and may increase over time. It can be a peppercorn (close to zero) or a nominal amount but it can also be hundreds of pounds. When and by how much the ground rent increases will be written into the lease. 

Government has said that it will cap ground rents on all new leases at £10 from mid-2020. However, if buying an existing lease or extending your current lease, the ground rent may still be over £10, which can increase over time. You should always check the ground rent on a property before signing a lease. Properties which have ground rents that increase substantially over time may be hard to mortgage.

You should always pay your ground rent, even in a dispute. If you do not, the freeholder may have the right to repossess your property.

Retirement properties have different rules for ground rent.

Whose advice should I seek when buying a leasehold flat?

You should always seek the advice of an independent solicitor/conveyancer when buying a new leasehold property. Leases are often long and complex documents, which will require legal expertise to understand. A solicitor can tell you about your obligations under the lease and raise any issues with what is being offered.

Any legal advice you seek should be independent of the homebuilder or agent you buy from. This will ensure that the solicitor is looking out for your interests alone. 

You can use The Law Society’s free search tool to find a solicitor.

How long should be left on a lease when I buy it?

Leases can vary in length. This will depend on how old the property is and how long the original lease was granted for. The longer the lease, the more valuable it is. As such, leases with less time remaining usually cost less than a comparable property with a longer lease. 

However, you should be aware that leases lose significant value when they fall below 80 years. Leaseholders can also find it harder to mortgage or sell properties with leases below this length, which is why it is important to consider extending them before they fall below this length. 

What is a sinking fund?

A sinking fund is money collected by a landlord through service charges to pay for the cost of major work. This fund helps landlords and leaseholders to prepare for any unexpected and/or expensive works in the future that go beyond the normal service charge budget. For example, the sinking fund could go towards the cost of a new roof. It means that leaseholders are less likely to be suddenly hit with a large bill, as the cost is spread out over time.

Some leases state how much leaseholders need to contribute to the sinking fund as part of their service charges each year. However, most do not. This means the landlord will determine the amount leaseholders have to contribute, provided this is reasonable. As with any kind of variable service charge, leaseholders have the right to challenge the service charge through the First-tier Tribunal.

Where can I find an affordable home to buy?

You look for affordable homes on our Homes for Londoners portal. It allows Londoners on low to middle incomes to search for shared ownership, London Living Rent, and other types of affordable home ownership. 

By pulling together properties from across London, it makes finding an affordable home quicker, more accessible and easier, for those who need it most.

Londoners can also find new private sale properties available for London and UK-based buyers only, including Help to Buy properties.

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I want to extend my lease or buy the freehold

Information on how to extend a lease or buy the freehold to a leasehold property.

How do I extend the lease on my flat?

Leaseholders of flats have the right to claim for a lease extension of 90 years at a peppercorn (zero) rent.  To do so, the original lease must have been at least 21 years long, and the leaseholder owned it for two years or more. 

Seek legal advice from a solicitor and a valuer before you start this process.

The price paid for the lease extension is called the premium. A valuer should assess the premium payable by you, which will give you an estimate of what you’ll pay. They should provide a ‘best and worst’ figure for the premium so you have an idea what the ‘competent landlord’ (usually the freeholder) might ask for. 

The competent landlord is the person who will grant you the additional 90 years. It is usually your landlord, but not always. You may have to pay the competent landlord's legal and valuation fees, so should factor this in to your costs. Next, a solicitor should help you to gather the information you must include in the notice to the freeholder.

To formally start the lease extension process, the leaseholder must serve notice to the freeholder of their request to extend the lease. This notice should include certain information, including the proposed premium. The freeholder must then respond with a counter notice admitting or denying that you qualify for a lease extension. They will either accept these terms, propose new terms and premium (which can be determined by First-tier Tribunal), or claim the right of redevelopment.

The LEASE website has a detailed guide on flat lease extensions.

You should be aware that the Law Commission is investigating changes to how leases are extended, which may make the process easier. However, government has not responded yet. It is expected that any new processes would come into effect mid-2020 at the very earliest. You may wish to consider this before extending a lease.

How can I buy the freehold to my flat?

Buying the freehold to your flat is also known as collective enfranchisement. An individual leaseholder of a flat does not have a legal right to buy the whole freehold. Instead they may have a right to buy the freehold collectively along with other leaseholders in their building. You should hire a solicitor or conveyancer and valuer for advice as this can be a complicated process,

To start the process of buying your flat’s freehold, you’ll need to be a qualifying tenant. Qualification includes your building containing at least two flats. At least two-thirds of flats must be owned by long leaseholders (over 21 years). Finally, at least half the flats held by long leaseholders in the building must agree to the proposed approach.

Before starting, leaseholders who are collectively buying the freehold should sign a legal agreement. This will govern their involvement in the purchase, outlining how they will share the costs of buying and make significant decisions once completed.  

To begin with, leaseholders must choose a nominee purchaser who will acquire the freehold and become the new landlord. This can be a person, a trust, or, most commonly, a company formed by the leaseholders to buy the building. 

Once a nominee purchaser has been chosen (or set up) they must serve initial notice to the freeholder that they wish to buy the freehold. The freeholder must serve a counter notice within two months setting out their response to the claim.

It’s hard to work out the costs of collective enfranchisement and usually a specialist valuation is necessary. The nominee purchaser must pay for the reasonable legal costs of the freeholder from the date they receive the initial notice.

The LEASE website has more information on collective enfranchisement.

You should be aware that the Law Commission is investigating changes to buying the freehold of leasehold properties, which may make the process easier. However, government has not responded yet. It is expected that any new processes would come into effect mid-2020 at the very earliest. You may want to consider this deciding to buy the freehold.

How can I buy the freehold to my house?

If you live in a leasehold house, you should qualify to buy your property’s freehold if you’ve had the lease for two years, and if the original lease was granted for at least 21 years. You should hire a solicitor or conveyancer to help you with this process and make sure they have experience in this area.

Buying the freehold to a property is also called enfranchisement. To start this process, the leaseholder must serve notice to the freeholder of their wish to purchase. The freeholder must then respond within two months. A leaseholder's notice must contain certain information and you should instruct a solicitor to do this for you. You should also seek specialist valuation advice from a surveyor. It will help you understand how much the process will cost and what price to put in your notice.

The cost of buying the freehold will vary. It depends if the lease has already been extended, how long it has left to run, and the property’s (or land’s) market value. You will also be required to pay the legal costs of the freeholder. If you can’t agree a price with the freeholder, it can be decided by the First-tier Tribunal.

You may not be able to buy or extend your lease if you are the leaseholder of a Crown or National Trust property, or a shared ownership leaseholder with less than a 100 per cent share in the property.

The Law Commission is investigating changes to buying the freehold of leasehold properties, which may make the process easier. However, government has not responded yet. It is expected that any new processes would come into effect mid-2020 at the very earliest. You may want to consider this deciding to buy the freehold.

How do I extend my lease on my house?

Extending the lease on a house is a similar process to buying the freehold. Leases on houses can only be extended by 50 years. That means it’s usually better to buy the freehold of the property instead, making the right to extend a house lease almost redundant. For this reason, this guide does not set out any further details, but more information can be found on the HomeOwners Alliance website.

You should note that the Law Commission is investigating changes to how leases are extended, which may make the process easier. However, government has not responded yet. It is expected that any new processes would come into effect mid-2020 at the very earliest. You might want to consider this before extending a lease.

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I already own a leasehold property

Information for Londoners who already own a leasehold property.

How do I find out who my landlord is?

A leaseholder has a right to know the identity of their landlord. This is usually the freeholder. Your lease should include your named landlord, so check it first.  If the original landlord has changed, you should contact the Land Registry to find out who the registered landlord is. This service has a small charge. 

You should also check your service charge demand or ground rent demand for the landlord’s name and address. If you can’t find it, you should contact the person who asks for ground rent or service charge (probably the landlord's agent) requesting the landlord's details. They should reply within 21 days. LEASE has a letter template you can use.

If your landlord is a company, a leaseholder can write to the landlord (or landlord's agent) requesting the name and address of the company directors and of secretary. LEASE has a letter template you can use.

What is Right to Manage and how is it done?

The Right to Manage allows leaseholders to take over management and appoint a new manager of their building, through a Right to Manage company (a company set up by a group of leaseholders to take over management of their building). This is only available to leaseholders of flats.

It is your legal right to exercise the right to manage and, as long as you are a qualifying tenant, you do not need any other reason to do so. Qualification includes your building containing at least two flats. At least two-thirds of flats must be owned by long leaseholders (over 21 years). Finally, at least half the flats held by long leaseholders in the building must agree to the proposed approach.

To start the process, the group of leaseholders interested in changing the building management must set up a Right to Manage company. The Right to Manage company must have an Articles of Association which govern its purpose and running. They must send a notice inviting all leaseholders who are not members of the company to participate. Next, they must serve a notice to the freeholder that they intend to claim the right to manage. The freeholder can challenge the claim with a counter-notice within one month.

Once the right to manage has been accepted and arranged, the new company takes all management functions three months from the date of the freeholder’s response. It can decide to carry out day-to-day management itself or delegate this function to a managing agent.

The LEASE website has a guide to the Right to Manage process

You should note that the Law Commission is consulting on changes to the Right to Manage process, which may make the process easier. However, government has not responded yet. It is expected that any new processes would come into effect mid-2020 at the very earliest. You might want to consider this before starting the process.

What is a Section 20 consultation and what should I look out for?

A landlord must consult leaseholders before carrying out works on a building where the contribution required from any one leaseholder exceeds £250. Section 20 also applies where the landlord enters into a qualifying long-term agreement with a third party for over 12 months. The single leaseholder required contribution in this case must be over £100. 

The exact notice requirements differ depending on the type of work. It is broadly a three-stage process which includes:

  1. the pre-tender stage – notice of intention
  2. the tender stage – notification of landlord's proposals and estimates
  3. in some cases, notice of reasons for awarding the contract

During the process, you have the chance to make observations which the landlord must give due regard to. The LEASE website has more information.

If you think your landlord has not done the Section 20 consultation properly, you can refer the matter to the First-tier Tribunal. If found in your favour, the landlord may be capped at recovering £250 (for qualifying works) or at £100 (for a qualifying long-term agreement) per leaseholder. In cases where Section 20 is not required, or the landlord has been exempted from this process, you still have the right to challenge costs. For example, if you feel they are unreasonable and/or are not described as recoverable in your lease.

Who should I contact if I have a complaint about the management of my building?

If your flat is in a privately-owned block, you should first try and deal with this through your property’s residential managing agent’s complaints process.  If the landlord or residential management company has not appointed a managing agent, you should complain directly to your landlord or residential management company. If you don’t think your complaint has been dealt with properly, you can contact an independent redress scheme who will investigate it further. 

All residential managing agents must belong to a redress scheme. You should contact your residential management company or agent and check which scheme the agent that manages your building belongs to. The two schemes are The Property Ombudsman or The Property Redress Scheme.

However, if you are a leaseholder and your landlord is a social housing provider (local authority or housing association) contact the Housing Ombudsman instead. If you want information on renting a property from a private landlord, check out our advice for renters.

Who has responsibility for repairs to my building and/or property?

Responsibility for repairs will be set out in your lease document, but you should check with your landlord if you are unsure.

For flats in a shared building, repairs to the inside of your flat are usually the leaseholder’s responsibility. Repairs to the structure and exterior of the building and common areas are usually the responsibility of the landlord, freeholder or residential management company. However, the cost of these repairs may be charged to the leaseholders through a service charge. 

Can I rent my property out as a leaseholder?

Whether or not you can sublet your property or take in a lodger depends on the terms of your lease. Many leases do not allow the subletting of a property without permission from the landlord. In some cases, it is prohibited entirely, or you can be charged for permission to do so. Subletting includes renting your property for extended periods (on an assured shorthold tenancy) and potentially even a short-term basis (via platforms like Airbnb). 

Before subletting your property for any period of time, you should always check with your landlord that you have permission to do so. If not, you may be in breach of the lease. You should also check with your mortgage provider.

In addition, you should check with your insurance provider that you have the correct insurance in place to cover your property. Some insurance policies may be invalidated by subletting. This could lead to unexpected charges for you and other leaseholders in the building.

What is the Mayor doing to support those worried about cladding on their buildings?

The Mayor does not have a statutory role in setting or reforming the Building Regulations and the Greater London Authority (GLA) does not have responsibility for Building Control. Since the Grenfell Tower tragedy, the Mayor has done everything he can to improve the safety of buildings by using his powers directly or lobbying the Government for change. 

The Government has announced funding to cover remediation works on local authority, housing association and privately owned high rise blocks with aluminium composite cladding (ACM).

In May 2018, the Government announced £400 million to remove and replace unsafe ACM cladding systems on high-rise tower blocks in England owned by social landlords. The prospectus sets out the scope and eligibility criteria for the fund. The GLA is administering the Social Sector ACM Cladding Remediation Fund on behalf of the Government for buildings in London. Leaseholders in buildings owned by social landlords worried about cladding should contact them in the first instance.

In May 2019, the Government announced £200 million to remove and replace unsafe ACM cladding systems on high-rise private sector residential buildings in England. The GLA is administering the Private Sector ACM Cladding Remediation Fund on the Government’s behalf for buildings in London. Leaseholders in privately owned buildings worried about cladding should contact their managing agent or landlord in the first instance.

All decisions regarding the scope and design of the above funding, and approvals of applications, are carried out by the Government. The Mayor has called for both funds to be extended to cover all types of unsafe cladding and interim safety measures. 

The Mayor and the GLA cannot provide advice on specific cases. Leaseholders can access free, independent advice regarding fire safety by visiting LEASE’s website or scheduling a telephone appointment with them. The LEASE website has more information on leasehold and fire safety issues.

For fire safety advice in the home London Fire Brigade provides free home fire safety visits where personalised fire safety advice is given and smoke alarms fitted if needed. You can book a visit now.

You can find out more about this area of work on the GLA’s building safety page. The Government’s Building safety page for leaseholders includes other advice services that you might want to consult.

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Glossary

A selection of useful terms and phrases that you may come across when dealing with leasehold property.

Useful terms and phrases

Commonhold

Commonhold is an alternative to leaseholders and freeholders in a building being separate entities. Commonhold allows individuals or organisations freehold ownership of individual flats, houses, and non-residential units within a building or an estate, rather than owning them on a leasehold basis as is presently the case.

The owner of each flat, or unit, has freehold of that unit rather than a lease. The rest of the building or estate is owned collectively by all the flat and unit holders through a commonhold association. Their ownership of the land is not time limited as it is with leasehold.

Conveyancer

A person who is not a solicitor, but who is qualified to do the legal work involved in buying and/or selling a property. They must be licensed.

Covenant

An obligation to perform an action or to cease from performing an action, usually found in a lease contract. If a covenant is broken there are legal repercussions.

Exit/event fees

An exit fee (sometimes called an event or transfer fee) is a charge set by a landlord to be paid by the leaseholder at a certain event. The event is usually when the property is being sold or sublet to someone else. The amount of the fee is calculated based on a formula or price set out in the lease. 

This type of fee is very common in retirement properties. You should always check your lease for exit fees before signing it. Leaseholders have no legal protection from paying these fees. This is because it is a private contract between the leaseholder and landlord, agreed when the lease is signed.

Forfeiture

If a leaseholder breaks a lease condition (or covenant), a freeholder can go to court to evict the leaseholder and end the lease. This is a process called forfeiture. 

Freehold/Freeholder

Freehold is a type of property ownership, where a person or organisation owns outright,  forever, a property and the land it is built on.

The freeholder has ultimate ownership and say over what happens on the land and any buildings on it. They may rent property, land, or parts of the land to other people, either by renting it short term or by leasing it longer term. However, ultimately the property reverts to the freeholder.

Intermediate lease

An intermediate lease, sometimes called an intermediate leasehold interest or headlease, is a lease in between that of a leaseholder and a freeholder. For example, the immediate landlord of a leaseholder may not be the freeholder. Instead, there may be an additional leaseholder of the property (usually for more than one flat or unit) who has sub-let their leased interest to further leaseholders. They are known as an underlease. Whether there is an intermediate lease should have little impact on a leasehold property’s day-to-day management. However, it is important when leaseholders seek to buy the freehold or extend the lease.

Lease

Lease is another term for a tenancy agreement. Usually this is a contract between a freeholder and a leaseholder. The lease document sets out the rules which govern your use of a property that is being leased.

Leasehold/Leaseholder

Leasehold is a form of long-term tenancy where the purchaser buys the right to live in the property for a stated time. This is usually 99 or 125 years. The person who owns the lease on the property is called the leaseholder. Unless it has been extended, at the end of the lease, the right to live in the property reverts to the freeholder.

The rules a leaseholder must follow are governed by a contract, known as the lease. It can include restrictions on what they can do to a property. For example, whether they can have pets and whether they can rent the property out.

Mortgage

An agreement to borrow money to purchase land or property (for example a house). The lender may take possession of a property if the borrower fails to repay the money.

Nuisance clause (lease)

Most leases will contain a nuisance clause which aims to prevent individual leaseholders causing issues for other leaseholders in a building. It may mention things like noise, only using the flat for legal purposes, and whether there should be carpet on the floor.

Qualifying long-term agreement

This is an agreement for a term of over 12 months. It must be consulted on first if the contribution from any one leaseholder exceeds £100.

Right to Manage company

A Right to Manage company is a company set up by a group of leaseholders (of flats) to take over management of their building. It is governed by Articles of Association that set out the purpose and running of the company. Find out more about Right to Manage.

Sub-letting

Sub-letting is where a leaseholder lets (i.e. rents) part or all their property to someone else, known as a subtenant or lodger. Many leases will require that the leaseholder seeks permission from the landlord (or freeholder) before they sublet their flat.

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Where can I get advice on leasehold issues?

Leasehold Advisory Service (LEASE) is the free government-funded advice service for leaseholders in England and Wales. They provide free initial advice to the public on leasehold issues. As well as a telephone help line, they have a wide range of resources on their website. 

There are several other websites which provide useful information about leasehold, these include:

You could also contact Citizens Advice, your MP or local councillor.

Leasehold Knowledge Partnership run the All Party Parliamentary Group (APPG) on leasehold and commonhold reform and provide support and advocacy for those experiencing issues with the leasehold tenure. You can contact Leasehold Knowledge Partnership if you have a leasehold issue that you would like to bring to their attention.

Legal disclaimer

The purpose of this guide is give general guidance only. It does not constitute legal advice, nor should it be relied upon. You should always seek independent formal legal advice prior to taking any legal decisions and/or entering any legal documentation relating to residential leasehold property. 

This guide is not exhaustive. The information here has been tailored to Londoners and may be different for those living outside the capital.

Please note:

  • You should always seek independent legal advice when signing a new lease or making variations to an existing lease. Leasehold is a confusing topic and seeking legal advice could save you lots of money in the long term.
  • This guide is for leaseholders. If you are a freeholder or landlord, there are alternative advice providers you can contact.
  • The GLA is not responsible for the content of external websites.

 

What else would you like to see in this guide?

The Mayor is committed to improving advice for leaseholders in London. If there is more you would like to see in this guide, email [email protected] to let us know.

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