This guide to leasehold property is part of our complete guide for international buyers. For a general overview, see our guide to buying property in London.
Freehold and Leasehold: Two Different Ways of Owning Property
When you buy a property in London, you are not always buying the same thing. The type of ownership depends on a distinction that does not exist in many other countries: the difference between freehold and leasehold.
Freehold is outright ownership. The freeholder owns the property and the land it stands on, with no time limit. Detached houses in London are almost always freehold.
Leasehold is a different kind of right: you purchase the right to occupy and use the property for a defined number of years — the length of the lease — but the land remains owned by the freeholder. When the lease expires, in theory, the property reverts to the freeholder.
The vast majority of flats in London are leasehold.
For a broader view of how the London property market works — demand, pricing, micro-markets — see our dedicated guide.
For international buyers, this distinction is fundamental. Leasehold is not a rental agreement, but it is not full ownership either. It is a real property right with an expiry date, and the remaining length of that right directly affects the property’s value, your ability to obtain a mortgage, and how easily you can resell.
What the Lease Length Means
Not all leaseholds are equal. The remaining lease length is the first thing to check, and the differences between one duration and another are substantial.
999 years — In practice, equivalent to freehold. The property will not lose value because of the lease length, and you will never need to worry about an extension. Many new-build developments are sold with 999-year leases.
125 years — A standard length for many buildings constructed during the twentieth century. With 125 years remaining, there are no immediate concerns: lenders will grant mortgages without difficulty and the property value is not significantly affected. If the lease was originally granted decades ago, the remaining term will be less than 125 years — and it is the remaining term, not the original term, that matters.
99 years — Still acceptable to most lenders and buyers, but approaching the threshold that requires attention. If you buy a property with 99 years remaining and plan to hold it for 15–20 years, the next buyer will be below 80 years — which can affect resale prospects.
Below 80 years — This is the critical threshold. Below 80 years, the cost of extending the lease increases significantly. Some lenders may refuse to grant a mortgage, or may require the lease to be extended as a condition of lending. The pool of potential buyers narrows.
The 80-Year Threshold and Marriage Value
When a lease drops below 80 years of remaining term, the calculation for the extension cost changes. The so-called marriage value comes into play: an additional sum that reflects the increase in the property’s value resulting from the extension itself. In effect, the freeholder is entitled to a share of the value that the extension “creates.”
This can make the extension considerably more expensive than if it had been carried out before the threshold. The difference is not marginal: for higher-value properties, the marriage value can add tens of thousands of pounds to the cost.
The practical recommendation is clear: if you are buying a property with a remaining term near 80 years, include the cost of extension in your overall budget and have it assessed by your solicitor and a specialist valuer before making an offer.
Note on reforms: The Leasehold and Freehold Reform Act 2024 provides for the abolition of marriage value. However, this provision has not yet come into force (as of April 2026). Until the law is actually operative, marriage value remains part of the calculation. It is prudent not to base purchasing decisions on reforms that have been announced but are not yet in effect.
Service Charge and Ground Rent: The Recurring Costs of Leasehold
Owners of leasehold property pay two recurring costs that do not exist under freehold ownership: the service charge and ground rent.
Service charge — This covers the maintenance of communal areas, building insurance, management fees, and in buildings with extended amenities, items such as concierge, gym, security, and recreational facilities. The amount varies widely: from a few thousand pounds a year for a simple, well-managed building, to significantly higher figures in buildings with premium services or major maintenance requirements. Leaseholders have historically had more limited control over spending decisions than freeholders — although recent reforms are strengthening owners’ rights.
Ground rent — This is an annual payment to the freeholder for the use of the land. For all leases created after 30 June 2022, ground rent is fixed by law at a peppercorn — a nominal value, effectively zero. For older leases, ground rent can still be significant and, crucially, may contain automatic escalation clauses — periodic doubling, inflation indexation, or revaluation linked to property value. These clauses must be identified and assessed carefully before purchase.
How to Check Service Charge and Ground Rent Before Buying
Your solicitor will examine these items during the conveyancing process. As a buyer, you are entitled to see:
- The managing agent’s accounts for the last few years
- The service charge history (amounts actually charged)
- Whether a sinking fund or reserve fund exists and its current balance
- Any major works planned or in progress
- Outstanding arrears or disputes with the freeholder or managing agent
- The exact ground rent amount and any review clauses
This data is essential for calculating the true cost of ownership over time.
Impact on Value and Resale
The remaining lease length is one of the factors that most directly affects the market value of a London flat. Two identical properties in the same building can have different values if the lease lengths differ.
As a general guide:
- A lease with more than 90 years remaining does not carry a significant value penalty
- Between 80 and 90 years, the value begins to be affected and some buyers — particularly those needing a mortgage — may be deterred
- Below 80 years, the penalty becomes more pronounced and the pool of potential buyers narrows: many lenders require the lease to have at least 70–80 years remaining at the end of the mortgage term
For an investor buying in London, the lease length should be assessed in the context of your holding period. If you plan to resell within 10–15 years, a 95-year lease may work — but the future buyer will be below 80, which could reduce the pool of interested purchasers. If you are buying with a long-term view, a longer lease protects value over time.
Lease Extension
Qualifying leaseholders have the legal right to extend their lease. The standard extension is 90 years, added to the remaining term, with ground rent reduced to a peppercorn.
What changed on 31 January 2025: Section 27 of the Leasehold and Freehold Reform Act 2024 abolished the requirement to wait two years from the date of purchase before exercising the right to extend. This means you can begin the extension process immediately after completion.
How the process works: Extension is not automatic. The buyer (or their solicitor) must serve a Section 42 notice on the freeholder, accompanied by a valuation of the extension premium prepared by a specialist valuer. The freeholder can accept or make a counter-proposal. If agreement cannot be reached, the matter is decided by the First-tier Tribunal.
The cost of extension depends on three main factors: the property’s value, the remaining lease length, and (for leases below 80 years) the marriage value. There is no fixed amount: extending an 85-year lease on a modestly valued flat will cost far less than extending a 65-year lease on a high-value property.
Note on ongoing reforms: The draft Commonhold and Leasehold Reform Bill, published in January 2026, proposes a standardised formula for calculating the extension premium and the abolition of marriage value. If and when these provisions come into force, the cost of extension will fall significantly for leases below 80 years. As of April 2026, these reforms are in parliamentary consultation and are not yet law.
The Reforms: What Is in Force and What Is Not Yet
The British leasehold system is the subject of an extensive programme of reform. For a buyer evaluating a purchase today, it is essential to distinguish between what is already law and what has been announced but is not yet operative.
Already in force:
- Peppercorn ground rent for all new residential leases created after 30 June 2022 (Leasehold Reform (Ground Rent) Act 2022)
- Abolition of the two-year qualifying period for lease extension or collective freehold purchase, in force from 31 January 2025 (Section 27, Leasehold and Freehold Reform Act 2024)
- Simplification of Right to Manage: lowered non-residential participation threshold and revised cost-sharing, in force from March 2025
Announced, in consultation, not yet law:
- Draft Commonhold and Leasehold Reform Bill (published 27 January 2026): proposes a ban on leasehold for new builds (commonhold as default), a cap on ground rent at £250/year with reduction to peppercorn after 40 years, abolition of marriage value, and abolition of forfeiture
- The government has stated the objective of “ending the leasehold system within five years” (March 2026)
- Consultation is ongoing on the timing and scope of the leasehold ban for new construction
What this means for buyers today: The reforms already in force are positive and tangible — particularly the abolition of the two-year requirement, which gives immediate flexibility. The announced reforms, if passed, will further improve leaseholders’ position. However, parliamentary timelines can extend and the final content of the law may differ from the initial proposal. The recommendation is to assess every purchase on the basis of current rules, treating future reforms as a potential benefit but not a certainty.
For a broader analysis of the evolving regulatory landscape in UK property, see our guide to UK property reforms.
Real Risks for International Buyers
Leasehold is not a trap, but it is a system with specific characteristics that can become problematic if not understood in advance. These are the concrete risks that an international buyer should be aware of.
Buying without understanding what you are buying. Leasehold does not exist in many countries, and the temptation to treat it as a technical detail is strong. It is not: it affects value, recurring costs, resale prospects, and your freedom to manage the property. Have the lease explained by your solicitor before making an offer, not after.
Short lease without an extension plan. A property with fewer than 80 years remaining may look like an opportunity — the price will be lower than comparable properties with longer leases. But if you have not budgeted for the cost of extension, what looks like an opportunity can become a problem.
Opaque or rising service charges. Some buildings have inefficient management, unplanned major works, or service charges that increase rapidly. Ask for the history of the last 3–5 years and check whether any major works are scheduled before committing.
Ground rent with escalation clauses. Older leases may contain clauses that provide for doubling of ground rent every 10, 15, or 25 years. These clauses must be identified during conveyancing and assessed in the context of the overall cost of ownership.
Counting on reforms. Planning a purchase on the basis of laws that are not yet in force is a real risk. Parliamentary timelines can change, and the final content of reforms may not match expectations.
Frequently Asked Questions About Leasehold in London
What is leasehold and how does it differ from freehold?
Freehold is outright ownership of the property and the land, with no expiry. Leasehold is the right to occupy and use the property for a defined number of years, with the land remaining owned by the freeholder. The vast majority of flats in London are leasehold. Detached houses are almost always freehold.
How many years should a lease have for a purchase to be reasonable?
There is no single threshold that applies to everyone. As a guide: above 90 years, most lenders and buyers have no concerns; between 80 and 90, the value starts to be affected; below 80 years, the cost of extension rises significantly. The assessment should always be made in relation to your holding period and the budget available for a potential extension.
Can I extend the lease immediately after buying?
Yes. Since 31 January 2025, the requirement to wait two years from the date of purchase has been abolished. Qualifying leaseholders can begin the extension process immediately after completion. The standard extension adds 90 years to the remaining term and reduces ground rent to a peppercorn.
Will the British government abolish leasehold?
The government has stated its objective of ending the leasehold system and making commonhold the standard form of ownership for new builds. A draft bill was published in January 2026, but the most relevant reforms for current buyers — abolition of marriage value, ground rent cap for existing leases — are not yet in force. It is prudent to base every purchasing decision on current rules.
As an international buyer, what should I check before buying a leasehold property?
The essential checks are: the remaining lease length, the amount and clauses of the ground rent, the history and projection of the service charge, any outstanding arrears or planned major works, and restrictions on letting or renovation. Your solicitor will examine all of these during the conveyancing process.
Leasehold is the most common form of ownership for flats in London. Understanding it before making an offer — not after — allows you to assess the true value of what you are buying, anticipate the real costs of ownership, and avoid surprises.
For a complete overview of the buying process in London — from choosing an area to costs, procedure, and management — see our main guide for international buyers.
If you want to understand in detail how much it costs to buy in London — from taxes to legal fees, from the survey to recurring costs — see our guide to buying costs.
If you would prefer to be guided through the property assessment and the entire transaction, our private buying agent service is designed for international buyers purchasing in London.
