Leasehold Ownership
Ownership for a fixed term of years
Leasehold means owning a home for a fixed term of years, while a freeholder owns the land beneath it. Terms commonly run from 99 to 999 years, and ownership reverts to the freeholder when the lease ends. HM Land Registry records the tenure and the lease term in England and Wales. Leasehold exists in Northern Ireland too, but not in Scotland, where homes are owned outright.
What This Means
You usually own a flat, not the building or the ground under it. That means ground rent, a service charge you cannot opt out of, and the freeholder's permission for structural work. Buildings insurance is normally arranged by the freeholder and billed through the service charge. A leasehold house differs: you own the building but not the land. The lease shortens every year. Below 80 years an extension costs markedly more, because a charge called marriage value applies. This is one of the few things on this report that lenders and insurers price directly: most lenders want the lease to outlast your mortgage term by at least 30 years.
Practical Advice
- Ask your conveyancer for the exact number of years left on the lease before you make an offer.
- Ask a specialist valuer to quote the extension premium, and whether the marriage value reforms have taken effect yet.
- Ask the seller for the last three years of service charge accounts and the current ground rent.
- Instruct your conveyancer to serve the statutory lease-extension claim once you are the registered leaseholder, since the two-year ownership wait ended on 31 January 2025.
Key Points
- A flat with 72 years left triggers marriage value and costs substantially more to extend than at 85 years, where marriage value does not apply.
- Most long residential leases granted since 30 June 2022 carry a peppercorn ground rent, which is effectively nil.
Additional Information
Northern Ireland has its own leasehold law. Long leases with ground rents are common there, and a statutory scheme lets owners buy the ground rent out. The rights described here, including statutory extension under the Leasehold and Freehold Reform Act 2024, apply in England and Wales only.