Buying a Leasehold Property
Insight
Leasehold properties can offer a lower upfront purchase price, but they come with ongoing obligations that buyers must understand. With leasehold, you own the buildings but pay annual ground rent for the land. The lease agreement controls how the property can be used, how rent is calculated, and how often rent increases.
This guide explains the basics in simple terms so buyers understand what they are committing to before going unconditional.
How Leasehold Works
Leasehold ownership involves two parties:
- You – own the house or buildings
- Landowner – owns the land and leases it to you
You pay annual ground rent under the terms of a long-term lease, often 50–999 years. The lease sets out your rights and responsibilities as the building owner.
Understanding Ground Rent & Rent Reviews
Ground rent is the annual fee paid to the landowner. The lease specifies how it is calculated and when it can change. Most leases include scheduled rent reviews that adjust ground rent based on:
- land value
- market benchmarks
- valuation formulas
Rent can increase dramatically after a review, affecting affordability and resale value.
Worried about an upcoming rent review?
A lawyer can explain how the review will be calculated and whether negotiation is possible.
Key Lease Terms to Check
Important lease terms include:
- remaining lease duration
- rent review dates
- increase formulas
- rights to sublease or rent out the property
- maintenance obligations
- restrictions on alterations
- insurance requirements
Some leases contain strict rules that limit how you can use the property or increase long-term costs.
Risks & Common Buyer Mistakes
Important:
Never go unconditional without reviewing the full lease—summary sheets often miss critical details.
Common issues include:
- unexpected rent increases
- bank lending restrictions
- difficulty selling near a rent review
- misunderstanding lease obligations
- maintenance responsibilities falling on the homeowner
Leasehold is suitable for some buyers but requires careful financial planning.
Can You Buy the Land or Exit Leasehold?
Some leasehold properties offer opportunities to freehold the land (purchase it outright). Others do not. The ability to freehold depends entirely on the lease terms and the landowner’s policies. A lawyer can review whether freeholding is possible and what the cost might be.
Find a Lawyer for Leasehold Purchases
Providing the lease agreement, title documents and rent review dates helps match you with lawyers who can explain long-term cost implications and identify risks before you commit.
Buying a leasehold property?
We connect buyers with lawyers who specialise in leasehold due diligence and long-term cost analysis.
Frequently Asked Questions
What is a leasehold property?
A leasehold property is where you own the buildings but lease the land from a separate landowner. You pay annual ground rent under the terms of a long-term lease. This is different from freehold ownership, where you own both the land and the buildings.
Why are leasehold homes cheaper?
The purchase price is lower because you are not buying the land. However, the ongoing ground rent and periodic rent reviews can make leasehold more expensive in the long run.
What are rent reviews?
Rent reviews adjust the ground rent at set intervals (often every 7–21 years). The new rent is usually based on market land value, which can increase sharply. Some reviews result in significant rent increases.
Are leasehold homes harder to sell?
Often yes. Buyers may be cautious about rising ground rent, complex lease terms, and more limited lending options. Properties near upcoming rent reviews can be especially difficult to sell.
Can you get a mortgage for a leasehold property?
Some banks lend on leasehold, but criteria are stricter. They evaluate the lease terms, remaining lease duration, rent review schedule and affordability of ground rent. Lawyers can identify issues that may affect lending.
You don’t need all the answers
Property issues can feel overwhelming — especially when you’re facing deadlines. Sharing a few details about your situation is enough for a lawyer to understand the context and guide you through the next steps.
Get Help Understanding Leasehold Property
Leasehold homes involve ongoing ground rent, rent reviews and specific restrictions. Sharing the lease agreement, title, LIM and disclosure documents helps match you with lawyers experienced in leasehold due diligence.