What is a Leasehold Property?

Millions of people own a leasehold property, but this type of home ownership can be complicated and confusing at times. If you own a flat, it is highly likely that it is a leasehold property. Houses, on the other hand, do not tend to be leasehold - with a few exceptions when it comes to old terraced houses and new builds.

If you’re considering buying a leasehold property, it’s a good idea to become familiar with what ‘leasehold’ actually means and how this type of home ownership works. This blog from Andrew Lee & Co Property Lawyers is here to help - keep reading to find out what you need to know about leasehold properties.

Leaseholds explained

When buying a property in England or Wales, there are two main types to choose from - freehold and leasehold. In a nutshell, they mean the following:

Freehold - Someone who owns the freehold of a property owns both the property itself and the land it stands on, for an unlimited period of time. Oddly, they also own the airspace above the property up to about 500 feet.

Leasehold - A leaseholder owns the property but not the land on which it is built - that is owned by the freeholder. Ownership of the property also only lasts for a set period of time, though this can be a number of years, decades or even centuries. If a lease expires, ownership of the property reverts to the freeholder - however, most leases are extended before this happens.



Most flats are sold as leasehold properties or sometimes as ‘share of freehold’ properties, where the freehold is split between the residents of a building. Single-unit houses tend to be sold as freehold properties, as it's a more clear-cut scenario - there's only one property on that piece of land.

What charges are involved in a leasehold property?

Owning a leasehold property comes with certain charges that must be paid, either to a landlord or an agent that acts on their behalf, such as a block management company. Typical charges might include:

Ground rent

As the name suggests, ground rent is the fee you must pay for the land your home is built on. Some very low fees are referred to as “peppercorn” rent, and the majority of leaseholds will opt for a low amount or no ground rent at all. However, new developments tend to have higher ground rents. This type of charge is set to be abolished on new leases from July 2022.

Service charge

The service charge payments from each leaseholder are used to pay for any services that the lease states are the landlord’s responsibility. These might include cleaning, insurance, repairs and maintenance, and so on. The service charge will possibly also be used to pay the block management company’s fees. Watch out for service charges that are charged per square foot, as this can quickly add up.

When it comes to property matters, it’s important you have someone you trust on your side. Whether you need help with purchasing a leasehold property, mortgage advice, or anything else property-related, Andrew Lee & Co Property Lawyers are here to help. Contact us to find out more about how our property law services can help you secure your ideal home.