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Leasehold houses have caused a lot of confusion and frustration in recent years, especially for first time buyers who were unaware of the long-term implications.
While flats and apartments are often leasehold by default, many new-build houses were also sold this way, raising concerns about ground rents, service charges, and the costs involved in owning the lease.
If you’re buying, or already own, a leasehold house, here’s what you need to know and how we can help.
What is a Leasehold House?
When you buy a leasehold property, you own the home but not the land it sits on.
The land remains owned by the freeholder, and you’ll typically pay a ground rent to them, along with other potential costs for managing the site or giving permission for alterations.
In contrast, a freehold means you own both the property and the land outright, with no landlord involved.
Historically, houses were sold as freehold. But over the last decade, particularly following the Help to Buy scheme, some major house builders began selling houses on a leasehold basis.
This shift wasn’t always made clear to buyers, and it eventually led to widespread concern.
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Why Did Leasehold Become a Problem?
Leasehold ownership became controversial when it was revealed how much profit was being generated through lease terms, especially in new-build developments. Some leaseholders discovered:
- Ground rent was set to double every 10 years
- They had to pay thousands in permission fees for home improvements
- Their solicitor never properly explained the lease during the purchase
The issue gained media attention and was raised in Parliament. Eventually, the government took action, agreeing that if you’re buying a house, not a flat, it’s reasonable to expect freehold ownership.
Many builders have since stopped selling houses as leasehold, but thousands still own properties affected by these legacy terms.
Ground Rent, Permission Fees and Service Charges
Ground Rent
This is the annual payment made to the freeholder.
While some charges are fixed and reasonable, others increase significantly over time. Buyers found that spiralling ground rents made it harder to sell their homes later.
Permission Fees
Leaseholders may need formal approval to make changes to the property, such as building an extension or changing windows.
These permissions often come with costly fees that can’t be avoided without buying the freehold.
Service Charges
Some developments include shared green spaces, roads, or pathways that aren’t maintained by the council.
In these cases, a private company takes over maintenance, and homeowners contribute through service charges.
This can apply to freehold properties too, but it’s especially common with leaseholds. These charges can rise over time, and residents may feel they have little control over how the money is used.
What if You Already Own a Leasehold House?
If you weren’t aware your property was leasehold, or didn’t fully understand the terms, it’s worth reviewing your paperwork. Start by:
- Checking your lease for clauses on ground rent and permissions
- Reviewing past and projected service charges
- Contacting your solicitor if you believe important details were missed during purchase
If the lease is causing concern, we can talk you through your mortgage options and what’s possible depending on the property value and lender requirements.
Can You Buy the Freehold?
In many cases, yes. Leaseholders often have the right to purchase the freehold from the landowner, either through negotiation or a more formal process depending on how long they’ve owned the property.
Buying the freehold can give you full control, removing ground rent and permission fees. The cost varies, and you’ll need a solicitor to help with the legal process.
If you’re raising funds through a remortgage, we can help with that side of things too.
What to Watch for When Buying a Leasehold Property
If you’re considering a leasehold house, it’s important to:
- Read the lease carefully, especially ground rent clauses
- Ask about any estate or management fees
- Speak to your solicitor about what the lease includes
- Get clear advice before committing, especially if you are a first time buyer
How We Can Help
We regularly work with buyers and homeowners navigating leasehold challenges.
Whether you’re planning to remortgage, buy your freehold, or simply want to make sure the lease terms are manageable before you buy, our team can help.
If you’re applying for a first time buyer mortgage, or you’re unsure about how leasehold terms may affect your affordability or lender choice, we’re here to talk you through it step by step.
