Leasehold Homes: What Every Buyer Needs to Know

Buying your first home is exciting, but if you're looking at a flat - or even some new build houses - chances are you're buying a leasehold. That single word has caused a lot of confusion (and some real problems) for homeowners over the years.

So, what exactly does leasehold mean, and what do you need to look out for before committing? Let's break it down so you can feel confident and clued up - and make sure you're mortgage-ready with a little help from Klink.

 

Leasehold vs Freehold: The Basics

• Freehold: You own the property and the land it's on.

• Leasehold: You own the property for a fixed number of years (the lease), but not the land it's built on. That stays with the freeholder (aka landlord).

Leasehold is most common with flats, where the building and communal areas are shared. While it has also appeared with some houses in the past, particularly new builds, upcoming legislation will phase this out. Always check the current ownership structure, especially if you're considering a new build house.

 

What to Ask Before Buying a Leasehold property

1. How long is left on the lease?

• 999 years? Brilliant. 125 years? Still good. Under 85 years? Now you need to be cautious.

• A lease under 80 years can be costly to extend and may put off lenders or future buyers.

2. How much is the ground rent?

• This is an annual fee paid to the freeholder. Some are fixed; others increase over time.

• Escalating ground rents (e.g., doubling every 10 years) have caused big problems in the past. Many lenders won’t accept these anymore.

3. What are the service charges?

• These cover the upkeep of communal areas, buildings insurance, and sometimes even window cleaning.

• Charges can vary wildly. Ask to see recent statements and check for any large upcoming works (like roof repairs).

4. Who manages the building?

• Is there a management company? Are leaseholders involved?

• Poor management can lead to inflated charges and slow repairs.

5. Are there any restrictions in the lease?
Some leases ban things like subletting, owning pets, or making alterations. Always read the small print.

 

Will a Mortgage Lender Accept This Lease?

Lenders are stricter than ever when it comes to leasehold homes. They’ll want to see:

• At least 85 years left on the lease (some say 90+)

• Reasonable ground rent terms (capped or linked to inflation)

• Transparent service charges

If anything raises a red flag, it could delay or derail your mortgage offer. That’s why preparation matters - and why using a solicitor experienced in leasehold purchases is non-negotiable.

Important: Leasehold reforms are law, but many aren’t in force yet. Short leases can still make properties unmortgageable, and extension costs remain high.

 

Leasehold Reform: What's Changing?

The Leasehold and Freehold Reform Act 2024 became law in May, aiming to make leasehold ownership fairer and more transparent.

As of April 2025:

• The two-year ownership requirement has been abolished. This means leaseholders can now extend their lease or buy the freehold without waiting two years.

• Right to Manage reforms (from March 2025) make it easier for leaseholders in mixed-use buildings to take over management.

Key upcoming reforms include:

• Ban on new leasehold houses: This will stop new houses from being sold as leasehold.

• Capping ground rents on new leases: Aims to remove unfair and escalating charges.

• Standard lease extensions to 990 years with no ground rent

• More rights for leaseholders to take over building management

• Clearer, standardised service charge bills

If you’re buying now, these reforms may not yet apply to your lease, so review lease terms carefully and don’t assume future reforms will apply.

 

Lease Extensions

If you're buying a home with a shorter lease, you might consider extending it.

• No more 2-year wait - you can extend right away (from Jan 2025).

• It can cost thousands.

• The shorter the lease, the more expensive the extension.

This can impact your budget and timing, so always factor it into your plans.

Once the 990-year rule kicks in, it’ll get easier - but for now, timing is key.

 

How Klink Can Help

Buying a leasehold home adds extra layers to the mortgage process. But Klink is designed to help you:

• Get mortgage ready: Our mortgage readiness tool highlights any financial red flags, so you know what to fix before applying.

• Plan ahead: Use the Home Goal feature to set a clear timeline and savings target - including legal and lease-related costs.

• Understand your finances: Spending insights show you where you can save, helping you build a stronger deposit.

• Stay in control: With quizzes, articles and updates, you’ll learn what to ask and what to avoid at every stage.

 

Questions for Your Solicitor

Before you proceed with a leasehold home, take this checklist to your solicitor:

• What is the exact length remaining on the lease?

• Are there any upcoming or historical disputes between leaseholders and the freeholder or management company?

• What is the ground rent and how is it structured (fixed or increasing)?

• Can you show a history of service charges for the past few years and expected upcoming works?

• Are there any restrictions in the lease (e.g. pets, subletting, renovations)?

• Has the freeholder ever refused consent for lease extensions or alterations?

• Are there any unusual clauses or covenants to be aware of?

• Is the building eligible for Right to Manage?

• Has the lease ever been extended before, and what are the costs/considerations for doing so again?

• Are there any upcoming changes to the lease due to current leasehold reform legislation?

A good solicitor will walk you through all of this, but it helps to go in prepared.

 

Final Thoughts.

Leasehold homes can work just fine - but only if you go in with your eyes open. Hidden charges, short leases and complex terms catch out thousands of buyers every year.

Buying your first home should feel exciting - not stressful.

Download Klink today to get smart about your options, stay mortgage-ready, and buy with confidence.