Legal

5 Things to know about Leasehold Purchases

Buying a leasehold property may often be cheaper than buying a freehold house, however, without understanding the key factors, what seems like a lucrative venture could lead to unexpected consequences.

24 Jun 2025

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When looking at buying a leasehold property, especially as a property investor, there are a number of things you need to consider.

1. Understand Leasehold Ownership

Buying a leasehold property means owning the property for a set, diminishing, term, however the freeholder will retain ownership of the land.

This is common with flats, where there are shared spaces such as stairwells and communal gardens.

2. Check the Lease Length

It is important when purchasing a leasehold property to see how many years are left on the lease. Leases under 80 years can reduce property value and make it harder to get a mortgage or sell. It is possible to extend the lease term, but this will come at a cost. A leaseholder generally must pay a premium (purchase price) for the additional years as well as both parties legal and surveying fees.

3. Your Financial Obligations

Owning a leasehold property comes with additional costs. These can include ground rent, service charge and possibly contributions to sinking funds for major repairs or maintenance.

These charges vary by property and can impact your financial burden. The charges may also increase year on year.

4. Understand Your Rights and Responsibilities

When buying a leasehold property, it’s vital to understand the rights and responsibilities that come with the lease. You should have rights of access, support and protection, rights to use any common areas and services but you must also comply with the regulations set out in a lease which can be restrictive.

These can include restrictions on subletting, property alterations, or pet ownership.

5. Check the Potential Restrictions and Risks

Leases often include clauses that limit your control over the property. For example, if you wanted to buy it to rent and the lease stated you could not then sublet, it could hinder your ability to generate income from tenants.

Reviewing the lease with a legal expert is crucial to avoid any conflicts with your investment.

M&P Commentary

Denise Tottman, a conveyancing executive in our Residential Property Department said:

“You should always seek advice when deciding whether you want to invest in a leasehold property. In addition to the legal fees involved, be aware that there may be additional costs that cannot be predicted at the outset. You may also incur ongoing expenses during your ownership and should consider the limitations and obligations that come with leasehold ownership.”