How to buy a leasehold property in the UK

Anyone who purchases a flat in the UK will likely be acquiring a leasehold property. Some 4.8 million homes in England are leasehold, which equates to about one fifth of the total housing stock. As a leaseholder, you’ll enjoy many of the benefits of owning your own property – but still have certain costs to pay to the freeholder.

In this blog post, we’ll explain how to buy a leasehold property in the UK and outline some of the key considerations for prospective buyers.

Leaseholders and the law

Buying a leasehold property comes with legal considerations. Under UK law, buyers of leasehold properties are essentially purchasing the right to live in the property for a certain period of time (the lease term). Even though you own the leasehold interest in the property, your landlord, or freeholder, still owns the building (your block of flats, for example) and land on which it stands.

This means you will pay ‘ground rent’ and potentially service charge to your freeholder, both to rent this land from them and to pay for maintenance and repair of the building, and any common areas. When the lease comes to an end, ownership of the property will return to the freeholder.

An update to leasehold property law

Leasehold law has been scrutinised lately, as campaigners raise awareness of some of the vulnerabilities faced by leaseholders.

The Leasehold and Freehold Reform Act 2024 became law on 24 May 2024. It aims to make it easier and cheaper for leaseholders to extend their lease or purchase the freehold of their building.

Despite the Act already being law, many of its key measures will require secondary legislation to be enacted before they come into force. It is believed that this will happen through 2025 and 2026. Some changes have come into effect, including that there is no longer a requirement for a flat to have been owned for more than two years before an owner can exercise their right to extend their lease.

Avoid common pitfalls when buying a leasehold property

Buying a leasehold property can feel like a step into the unknown, with the prospect of legal changes potentially adding uncertainty for buyers. Thankfully, there are many common best practices to take when buying a leasehold property that won’t change.

            [1] Dig out the costs

Make sure you know how much the ground rent and/or service charge will cost. Find out also any details of how these costs have or will increase over time.

            (2) Check the lease

It is essential to find out how many years are left on the lease. The magic number is 80: if there are fewer than 80 years left then you will have to pay “marriage value” to renew it (although this is set to change, as it is one of the major changes in the legislative reform currently taking place).

            (3) Know what’s coming

If there any major works planned in your building in the next few years, you should know about them. That’s because you, as a leaseholder, will likely have to pay for them.

           (4) Find the names of the managing agent and freeholder

Most freeholders are not trying to overcharge leaseholders. But there are some with a reputation for managing buildings badly and exploiting people. You can usually find out this information online.

Protecting your rights as a leaseholder

As a leaseholder, you have the right to extend your lease (known as enfranchisement) or purchase a share of the freehold (collective enfranchisement). Please click here for our guide on collective enfranchisement.

It is a criminal offence for a freeholder to sell a leasehold property to a third party without first offering the leaseholder a chance to buy it. This is known as Right of First Refusal.

At Attwaters Jameson Hill, we have been helping leaseholders with lease matters for many years.

Having a specialist solicitor on your side allows you to navigate the process of buying a leasehold property as smoothly as possible. Our team is always on hand with the expert advice and specialist knowledge you need to minimise the risks and make the purchase successfully.

We can help with:

– Advice on buying a leasehold property and its legal implications

– Advice on how to proceed with a lease extension

– Negotiating with your freeholder to get the process underway

– Getting your lease valued by a professional surveyor

– Agreeing the lease and completing all matters so that we can then register the new lease at the Land Registry.

To speak to a specialist solicitor about buying a leasehold property or extending your lease, please call us on 0203 871 0039 or email leasehold@attwaters.co.uk.

Click here for our links on extending your lease informally or via the statutory route.