Buying a Leasehold Flat: What You Need to Know

If you're considering buying a purpose-built or converted flat, you've likely seen it advertised as ‘leasehold.’ This means you’re purchasing the right to live in the property for a fixed number of years—usually 99 or 125 years—as set out in a legal document called a lease. You can sell the property during that time, but you do not own the land it stands on.

The lease is a legal agreement between you (the leaseholder) and the freeholder (landowner), outlining both parties’ rights and responsibilities.

What to Check Before Buying

Lease Length

One of the most important things to check is how many years are left on the lease. A new lease typically starts with 99 or 125 years. This term decreases every year. For example, if you sell your flat after five years, the lease may have 94 or 120 years remaining.

Warning: If a lease has less than 70 years remaining, it may be more difficult to get a mortgage. A short lease can also reduce the property's value and make it harder to sell.

Lease Extension Tip: You can usually apply to extend your lease by 90 years once you've lived in the property for at least 2 years. While this comes with a cost, it can significantly boost your property's value and appeal to buyers.

Ground Rent

The lease will often include a ground rent—a charge the freeholder sets for the property occupying their land. This is usually modest (often under £100 per year), but in some newer conversions, it could be £200–£300 annually.

Some leases have a sliding scale for ground rent, meaning the amount increases at set intervals. Be sure to check the terms carefully to avoid unexpected future costs.

Service Charges

Your service charge covers the cost of maintaining the building and shared areas. These charges vary based on the type of property:

• For a simple conversion with only a hallway and stairs, service charges might include:

  • Electricity

  • Building insurance

  • A reserve fund for repairs

• For luxury developments, expect higher charges if they include:

  • Lifts

  • Gardeners or maintenance staff

  • Shared broadband or TV aerials

Management Costs: If the freeholder manages the building directly, service charges are usually lower. However, if a management company is involved, their fees will also be included—sometimes significantly increasing the overall cost.

Buying a leasehold flat comes with extra responsibilities and costs. Always check the lease length, understand the ground rent, and review the service charges before making an offer. Factoring these into your budget upfront can save you from unwelcome surprises later.