Finance glossary
Leasehold
Also known as: Leaseholder
In simple terms
With a leasehold property you own the right to live there for a set number of years, but not the land it sits on. A freeholder owns that, and you usually pay ground rent and service charges.
On this page
What does leasehold mean?
A leasehold means you own the property for the length of the lease — often originally 99, 125 or 999 years — but you do not own the land it sits on. When the lease ends, ownership reverts to the freeholder unless it is extended.
Leasehold is common for flats, because the building and common areas need to be managed collectively, and historically applied to some new-build houses too.
How leasehold works
The lease is a contract setting out your rights and obligations — including any ground rent, service charges, and rules such as restrictions on subletting, pets or alterations. The freeholder (or a managing agent) looks after the structure and common parts.
The number of years left on the lease matters a great deal. As it drops — especially below about 80 years — the property can become harder to sell or mortgage, and extending the lease gets more expensive.
How could this affect me?
Leasehold brings ongoing costs (ground rent and service charges) and less control, since major decisions and works rest with the freeholder or managing agent. Unexpected service-charge bills for major works can be significant.
Recent reforms have made it cheaper and easier to extend a lease or buy the freeholder’s interest, and have banned ground rent on most new residential leases — but always check the lease length and charges before buying.
Things to watch out for
- A short lease (roughly under 80 years) can be hard to mortgage or sell, and costly to extend.
- Service charges and “major works” bills can be large and are not always predictable.
- The lease may restrict subletting, pets or alterations — read it before you commit.
Know your rights
- The Leasehold Reform (Ground Rent) Act 2022 restricts ground rent to a peppercorn (effectively zero) on most new residential leases.
- The Leasehold and Freehold Reform Act 2024 strengthened leaseholders’ rights to extend a lease and to buy the freehold.
- Qualifying leaseholders have statutory rights to extend the lease or, collectively, to buy the freehold (enfranchisement).
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- GOV.UK, Leasehold property — extending, buying the freehold and your rights (opens in a new tab). Accessed 22 Aug 2026.
- legislation.gov.uk, Leasehold and Freehold Reform Act 2024 (opens in a new tab). Accessed 22 Aug 2026.