Leasehold buying guide: service charges, lease length, and what to check

What leasehold is

Leasehold is a long-term lease, typically 99, 125 or 999 years, granted by the freeholder. The leaseholder pays an annual ground rent and contributes to building costs through service charge. At the end of the term, ownership reverts to the freeholder unless extended. Lease extensions and the right to enfranchise (buy the freehold) are statutory rights.

Share of freehold is a related arrangement where the leaseholders collectively own the freehold via a company. Commonhold is a separate tenure type, rarely used in practice in the UK.

Lease length: the 80-year cliff

Lease length matters because shorter leases are more expensive to extend and harder to mortgage. The 80-year threshold is the historic cliff: below 80, the freeholder is entitled to half the 'marriage value' (the uplift in value from extension), making the extension significantly more expensive.

The Leasehold and Freehold Reform Act 2024 (Royal Assent 24 May 2024) abolishes marriage value. The High Court upheld the reform on 24 October 2025. The relevant valuation provisions still need secondary legislation to commence, so the 80-year rule continues to apply in practice for most extensions agreed today.

Service charge and what to ask for

Service charge covers the building's running costs: insurance, maintenance, cleaning, lifts, security, sinking fund. Charges have risen sharply since 2018, particularly in higher-risk buildings post-Grenfell.

• Last 3 years' service charge accounts (the freeholder must provide on request)
• Current annual demand and its breakdown
• Any planned major works (Section 20 notices)
• Sinking fund balance
• Any tribunal challenges to historic service charge
• Building insurance arrangements and any commission to the freeholder

Ground rent: onerous clauses

Ground rent is the annual sum paid to the freeholder. The 2017 leasehold scandal exposed onerous doubling clauses (every 10, 15 or 25 years) that made some new-build leasehold properties unsellable. The Leasehold Reform (Ground Rent) Act 2022 capped ground rent on most new long residential leases granted from 30 June 2022 at a peppercorn (zero).

Pre-2022 leases retain their original terms. Mainstream lenders are increasingly cautious about ground rents above 0.1% of property value or doubling clauses on cycles shorter than 25 years. A deed of variation can convert onerous clauses to acceptable ones.

Fire safety and EWS1

Post-Grenfell fire safety regulation has reshaped the leasehold flat market. For flats above 11m or 4 storeys. Most lenders require an EWS1 form (External Wall System certificate) rated A1, A2, A3 or B1. B2 (further work required) typically blocks mainstream lending until remediation. The Building Safety Act 2022 protects qualifying leaseholders from some remediation costs but not all.

What to ask before exchange

• Lease length, ground rent terms, and any escalation clauses
• Last 3 years' service charge accounts and any planned major works
• EWS1 status (if applicable)
• Any disputes with the freeholder, current Section 20 consultations, or tribunal challenges
• Whether the property is share of freehold (collective ownership of the freehold)
• Restrictions in the lease, pets, alterations, sub-letting, holiday letting

Related decoder findings

• Short lease (under 80 years)
• Ground rent escalation clause
• High or variable service charge
• Fire safety: flat and leasehold issues
• EWS1 form required

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Frequently asked questions