Leasehold
BeginnerLeasehold is a form of property ownership in which the buyer has the right to occupy and use a property for a fixed period, set out in a lease, while the land and often the building remain owned by a freeholder.
Leasehold is common in England and Wales, especially for flats, and also exists in other countries, sometimes under different names. Leases are often long, such as 99 or 125 years, and sometimes 999 years.
The leaseholder typically pays the freeholder ground rent and a service charge for maintaining the building and common areas, and must follow the lease’s terms, such as rules on alterations, pets or subletting.
For example, a buyer might purchase a flat on a 125-year lease. When the lease has fewer years remaining, the property becomes harder to sell and mortgage, because lenders often avoid properties with short leases, typically below about 80 years.
Leaseholders in England and Wales have rights to extend their lease or, together with other leaseholders, buy the freehold, although this can be costly. Recent reforms, including the Leasehold and Freehold Reform Act 2024, aim to make these processes cheaper and easier. In some countries, such as Australia and parts of Asia, leasehold arrangements are common for certain types of land.
For worked examples and full lessons, visit notesbysara.org.