Key considerations before you buy a leasehold property
Last updated on May 7, 2026
Leasehold is a popular form of ownership for homebuyers and investors alike. According to official government statistics, there are around 4.8 million leasehold dwellings in England, equating to around one fifth of the housing stock. Of these, 72% are flats and apartments and 28% are houses. London has the highest proportion of leasehold homes at 38%.
Leasehold ownership has had a mixed press in recent years, particularly on account of the ground rent scandal, but the government has taken significant action. Ground rent was effectively abolished for most new qualifying long residential leases in England and Wales from 30 June 2022, under the Leasehold Reform (Ground Rent) Act 2022, with retirement properties following from 1 April 2023. The Leasehold and Freehold Reform Act 2024 has since introduced further protections for leaseholders, and more reform is under way. If you are considering buying a leasehold property in London, it is important to understand what leasehold ownership involves so you can carry out careful due diligence.
At Squarepoint Chartered Surveyors, our experienced team brings together a wealth of surveying expertise and property industry knowledge for the benefit of residential and commercial clients in London and the South East. We can help with building surveys, refurbishment and restoration advice, licence to alter, and all party wall matters, providing professional leasehold property advice on a host of building-related issues. Here are the key questions to ask when buying a leasehold property.
What is the difference between leasehold and freehold?
A freehold title confers ownership of the building and the ground it is built on. A leasehold title, by comparison, confers the right to occupy the property for the period determined by the lease. A leaseholder has exclusive possession of the property for a fixed term, but they do not own the building outright. When the fixed term comes to an end, ownership reverts to the freeholder. In practice, this rarely happens since leaseholders have a statutory right to extend their lease.
What is the remaining duration of the lease?
By definition, a leasehold property is a depreciating asset, meaning the asking price should reflect the remaining years left to run on the lease. If the remaining term falls to around 80 years or less, mortgage and remortgage options can become more limited, while extending the lease is usually more expensive. The first key pieces of information any prospective purchaser should obtain are the number of years left to run, whether a lease extension is necessary and how much to budget for this.
It is worth noting that, since 31 January 2025, the Leasehold and Freehold Reform Act 2024 has removed the previous requirement to have owned a leasehold property for two years before applying to extend the lease. Buyers can now seek a lease extension as soon as they are registered as the new owner at the Land Registry, they no longer need to wait two years from the date of purchase. This is a significant change for anyone purchasing a property with a shorter lease.
How much is the ground rent?
For most new qualifying long residential leasehold properties in England and Wales granted on or after 30 June 2022, ground rent is restricted to a peppercorn under the Leasehold Reform (Ground Rent) Act 2022, effectively reducing it to zero financial value. For retirement properties, this took effect from 1 April 2023. If you are buying a property on a new qualifying long residential lease, you would not usually expect to pay a financial ground rent.
If you are buying an existing leasehold property on an older lease, ground rent may still apply. This may be a modest fixed sum, or it may increase at set review intervals depending on the lease terms. Escalating ground rents and onerous review clauses have been a major source of concern in leasehold reform, so these provisions should be checked carefully. Many mortgage lenders apply closer scrutiny where ground rent is more than 0.1% of the property’s value, and high ground rent or aggressive review clauses can affect saleability and mortgageability. Always ask your conveyancer to review the ground rent terms and any review clauses before exchange.
What are the other terms of the lease?
The lease is the formal document that specifies the terms under which leasehold ownership is conferred. It is crucial to fully understand what these are, and legal advice is highly recommended. Find out the rights and obligations granted under the lease, especially those that could affect how you wish to use the property such as restrictions on operating a business, keeping pets or subletting the apartment. Verify that the lease has a maintenance covenant obliging the freeholder to maintain the building and common areas.
What other important costs should be considered?
The main costs associated with leasehold ownership are ground rent where applicable (see above), service charges to contribute to the upkeep of the building and common areas, and administrative fees for freeholder consents and approvals as necessary. There is also the potential cost of extending the lease. Service charges can be a particular minefield since these are set by the freeholder. It is therefore essential to request detailed information regarding current and past service charges to see the level of expenditure and understand the frequency and extent to which they may fluctuate.
What is the current condition of the property?
We recommend an in-depth property inspection carried out by an independent surveyor as the best way to gain important insights into the condition and state of repair of the leasehold property. Squarepoint Surveyors offer a choice of building surveys that can be customised to your needs. Also find out about planned future expenditure for the building as a whole and whether a sinking fund exists to cover future works. If there isn’t one and the building is in a state of disrepair, this should be a cause for concern.
Are you planning to let the property?
If you are making a buy-to-let investment, particular consideration should be given to any sub-letting clauses in the lease. Is it permitted and are there any restrictions (e.g., no holiday lets, single families only, no pets) that could limit your rental market opportunities? When assessing the likely rental yield, make sure service charges, ground rent where applicable, insurance contributions, consent fees and other leasehold costs are fully factored in before comparing returns with a freehold property.
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There is no reason why leasehold ownership can’t work perfectly well for both owner occupiers a well as those considering a property investment in London. The important thing is to carry out careful due diligence and a thorough evaluation of both the condition of the property as well as the lease terms governing its ownership. Deploying caution and discernment at the outset is the best way to ensure that your purchase and ownership will be successful.
For expert advice with your next leasehold property purchase, please contact us, our team of specialist party wall surveyors, building surveyors and property experts have decades of experience and are a phone call away.
Author: Scott Buchanan