Leasehold means you own the right to live in a property for a fixed number of years under a lease, while someone else, the freeholder, owns the building and the land. Most flats in England and Wales are leasehold. The number of years left on the lease is the single biggest factor in a leasehold flat’s value: below 80 years, it becomes harder to mortgage and more expensive to extend.
This guide covers how a lease works, what the lease length means for value and mortgages, how to extend it, what you pay and what rights you have. For the head-to-head comparison, see leasehold vs freehold in London; for what freehold means, see our freehold guide.
How a lease works
A lease is a long contract between you (the leaseholder) and the freeholder (the landlord). It sets out:
- The term: how many years the lease was granted for (often 99, 125 or 999) and when it started.
- What you own: usually the inside of your flat, sometimes the windows or a garden; the structure, roof and common parts normally stay with the freeholder.
- What you pay: ground rent to the freeholder and a service charge for the building’s upkeep.
- What you can and cannot do: alterations, subletting, pets, flooring, business use.
The lease you buy is the one you are bound by, so your conveyancing solicitor should report on it in full before you exchange. You can download the lease and the title register from HM Land Registry; our guide to using HM Land Registry shows how.
Lease length: how many years is enough?
The lease shortens every year, and its value falls with it, slowly at first and then faster.
| Years left | What it means |
|---|---|
| 125+ | Treated by buyers and lenders much like a long lease; no action needed |
| 90 to 125 | Fine for most lenders; consider extending in the next decade |
| 80 to 90 | Extend soon: once you pass 80 years, the cost jumps |
| 70 to 80 | Many lenders become cautious; extension costs include “marriage value” |
| Under 70 | Hard to mortgage; usually sold to cash buyers at a discount |
Why 80 years matters: under the current rules, when a lease has under 80 years left, the premium to extend includes half the “marriage value”, the extra value created by the longer lease. That rule is due to be abolished by the Leasehold and Freehold Reform Act 2024, but not yet [confirm status on publication].
See what your flat is worth today:
Free property valuation
How much could your property sell for?
Enter the postcode and answer four quick questions. We'll estimate the sale price from Land Registry sales nearby, and the rent it could earn if you let it instead.
- Land Registry sales data
- Sale price and rent in one report
- Free, in under a minute
Buying a leasehold flat? Lenders usually want the lease to outlast the mortgage by a good margin. Check what you could borrow first:
Mortgage capacity calculator
How much could you borrow?
Buy-to-let lenders work from the rent. For a home to live in they work from your income. Enter a figure to see the loan, the price and a PDF you can keep.
Mortgage capacity calculator
How much could you borrow?
On a buy-to-let, lenders work from the rent. On a home to live in, they work from your income. See both.
The rent decides how much you can borrow. Find out what your property would let for.
Might you let the property one day? Find out what it would rent for.
Or book a callA guide only. It isn't a mortgage offer or financial advice, and Cozee is a letting agent, not a mortgage broker or lender. Every lender has its own rules and also looks at your credit record, age, spending and other properties, so speak to a mortgage broker before you make an offer. The figures leave out stamp duty, legal and lender fees. Sources: Bank of England rules for buy-to-let lending (SS13/16), GOV.UK stamp duty rates.
How much you can borrow: common questions
How much can I borrow on a buy-to-let mortgage?
Lenders work mainly from the rent, not your salary. The rent usually has to cover 125% of the mortgage interest if you pay basic-rate tax, 145% if you pay higher-rate tax and 125% if you buy through a limited company. The interest is worked out at a test rate that is higher than the rate you pay. Most lenders also lend no more than 75% of the property's value, so you need a deposit of at least 25%.
What is an interest cover ratio (ICR)?
It is the rent as a share of the mortgage interest. With a cover of 145% and a test rate of 7%, a £250,000 loan needs a rent of about £2,115 a month.
Why can I borrow more with a five-year fix?
Bank of England rules ask lenders to test a buy-to-let loan at the rate plus 2 percentage points, and at no less than 5.5%. A rate fixed for five years or more is exempt, so most lenders test it at or near the rate you actually pay. A lower test rate means the same rent supports a bigger loan.
Can I borrow more through a limited company?
Often, if you pay higher-rate tax. A company deducts all its mortgage interest before tax, so lenders usually ask for 125% cover, not 145%. Company mortgage rates and fees are usually higher, though, and moving a property you already own into a company can mean stamp duty and capital gains tax.
How much can I borrow for a home to live in?
Most lenders lend up to about 4.5 times your household income before tax. Some go up to 5.5 times for higher earners, and they lend less if you have loans, credit cards or childcare to pay. They also look at your spending and your credit record.
How much deposit do I need?
For a home to live in, at least 5% of the price, and rates are lower with 10% or more. For a buy-to-let, most lenders ask for at least 25%. Stamp duty and legal fees come on top of the deposit.
A guide only. It isn't a mortgage offer or financial advice, and Cozee is a letting agent, not a mortgage broker or lender. Every lender has its own rules and also looks at your credit record, age, spending and other properties, so speak to a mortgage broker before you make an offer. The figures leave out stamp duty, legal and lender fees.
Current rates, and how they have moved alongside Bank Rate, are on our mortgage rates chart.
How to extend your lease
Flat owners in England and Wales have a legal right to a lease extension. The statutory route adds 90 years to the remaining term and reduces ground rent to zero.
- Check you qualify. You must own a long lease of the flat. Since 31 January 2025 you no longer need to have owned it for two years.
- Get a valuation from a specialist surveyor. The premium depends on the flat’s value, the ground rent and the years left.
- Serve a Section 42 notice on the freeholder, through a solicitor, proposing a premium.
- Negotiate. The freeholder replies with a counter-notice; most cases settle.
- Apply to the tribunal if you cannot agree, within the statutory deadline.
- Complete. The new lease is registered at HM Land Registry.
You can also agree an informal extension directly with the freeholder. It can be quicker, but check the terms: informal deals sometimes add ground rent or onerous clauses.
Owners of leasehold houses can extend by 50 years or, more usefully, buy the freehold. Flat owners can buy the building’s freehold together if at least half take part; see how to buy the freehold.
What you pay as a leaseholder
Ground rent. An annual payment to the freeholder. Leases granted on or after 30 June 2022 must have a ground rent of zero (a “peppercorn”). Older leases can still have ground rent, sometimes with clauses that double it every 10 to 25 years, which lenders dislike. A draft bill published in January 2026 proposes capping ground rent on older leases at £250 a year, but it is not yet law.
Service charge. Your share of the cost of running the building: insurance, cleaning, lifts, repairs, the managing agent’s fee and a reserve fund for big works. It must be reasonable and you are entitled to see how it is spent.
Major works. Before the freeholder carries out works that will cost any one leaseholder more than £250, they must consult you under Section 20: a notice of intention, at least two estimates and 30 days to comment at each stage. If they skip it, your contribution can be capped at £250.
Other costs. Fees for consent to alterations, subletting or selling, set by the lease. They must be reasonable.
Before you buy, ask for three years of service charge accounts, the current budget, the reserve fund balance and any planned works. Our questions to ask at a viewing include these.
Your rights as a leaseholder
- Challenge service charges at the First-tier Tribunal (Property Chamber) if you think they are unreasonable.
- Ask for a summary of costs and inspect the invoices behind them.
- Be consulted on major works and long-term contracts (Section 20).
- Take over management through the Right to Manage, with the other leaseholders, without having to prove the landlord has done anything wrong.
- Extend your lease or buy the freehold collectively.
- Be protected from most building safety remediation costs if your building is 11 metres or 5 storeys or higher, under the Building Safety Act 2022.
The Leasehold Advisory Service gives free initial advice on all of these.
What happens when a lease runs out?
It rarely gets that far, because the flat becomes almost unsellable long before.
But if a residential long lease does expire, you are not simply evicted. In England and Wales the lease continues automatically, and the freeholder must either offer you an assured tenancy at a market rent or apply to court for possession on limited grounds. You lose the capital value of the lease, though, which is why extending well before 80 years is the sensible move.
Letting your leasehold flat
Most London buy-to-let flats are leasehold, and letting is normally allowed, but check the lease first:
- Subletting clause: some leases require the freeholder’s consent, a fee or notice of each new tenancy.
- Short lets: many leases ban holiday and short-term lets.
- Building rules: tenants must follow the same rules as owners (pets, flooring, noise).
Then check what your flat would rent for:
Free rental valuation
How much rent could your property earn?
Enter the postcode and answer four quick questions. We'll estimate the monthly rent from official ONS figures and the rents we achieve for landlords nearby.
- Official ONS rent data
- Calibrated on real Cozee lets
- Free, in under a minute
Check whether your borough requires a licence for rented homes:
Free licensing check
Do you need a licence to rent out your property?
Enter the postcode and answer three quick questions. We'll tell you which licence the council requires, what it costs, when it starts and how to apply.
- Every London borough’s schemes
- Free, in under a minute
- Fees, dates and how to apply
And compare what letting through an agent would cost:
Letting agent fee calculator
How much will a letting agent cost you?
See what you’d really pay, VAT included, for as long as your tenant stays. Got a quote from another agent? Add it to compare.
Find out what your property would rent for, and what you’d keep after fees.
See every Cozee fee Or book a callBefore you sign: ask every agent these questions
The headline percentage is only part of the cost. These are the fees and terms that make two quotes hard to compare. Cozee’s answers are shown too.
- Is the fee taken monthly or upfront? Since 1 May 2026, new tenancies in England roll on month to month with no fixed end date. If you pay 12 months upfront and the tenant leaves after 6, ask whether you get anything back. Cozee: Taken monthly from the rent
- Is the percentage before or after VAT? Most agents quote before VAT. 12% + VAT is really 14.4% of your rent. Cozee: Quoted + VAT; the calculator adds it
- Is there a setup or onboarding fee? Sometimes called an admin, registration or listing fee. Cozee: £180 (pre-letting inspection, portal listing, first checks)
- What do referencing and deposit registration cost? Since the Tenant Fees Act 2019 tenants can't be charged for these, so the landlord pays. Cozee: £36 per tenant referenced, £36 to register the deposit
- Who does the inventory and check-in, and at what price? Without a good inventory it is hard to claim from the deposit at the end. Cozee: From £180 + VAT (studio or 1 bed)
- What will safety certificates cost? Gas safety every year, an electrical report (EICR) every 5 years and an EPC every 10. Some agents add a mark-up to the contractor's price. Cozee: Gas safety £144, EICR £395, EPC £144
- Do you charge for tax returns if I live abroad? Overseas landlords need quarterly Non-Resident Landlord returns to HMRC unless they have HMRC approval to receive rent gross. Cozee: £120 a quarter
- How much notice do I give to leave, and is there a fee? Some contracts charge a fee to leave, or keep charging while the tenant they found is still in the property.
- Which redress scheme and client money protection scheme are you in? In England both are required by law. Ask for the certificates, and check the agent is on the scheme's website.
Letting agent fees: common questions
How much do letting agents charge in London?
Tenant find usually costs 8% to 12% + VAT of the rent, often paid upfront for the first year. Full management is usually 10% to 15% + VAT across the UK, and 15% to 20% + VAT with large chains and in prime London. Most agents also charge setup, referencing and inventory fees. At Cozee, tenant find costs 10% + VAT of the monthly rent plus a £180 setup fee, and full management costs 12% + VAT (14.4% including VAT).
Do letting agents charge VAT on top of their fee?
Almost always. VAT is 20%, so a fee of 12% + VAT takes 14.4% of your rent, and 15% + VAT takes 18%. Check whether a quote says "+ VAT" or "including VAT" before you compare.
What is the difference between tenant find and full management?
With tenant find, the agent markets the property, finds and references a tenant and sets up the tenancy. After that you collect the rent and handle repairs yourself. With full management, the agent also collects the rent, arranges repairs and safety certificates, does inspections and deals with the tenant day to day.
Are letting agent fees tax deductible?
Yes. Letting and management fees are allowable expenses, so you deduct them from your rent before working out the tax on your rental profit.
What happens to upfront fees now that tenancies roll month to month?
Since 1 May 2026, new tenancies in England have no fixed end date and a tenant can leave with two months' notice. If an agent takes a year's fee upfront, ask whether any of it is refunded when the tenant leaves early. A fee taken monthly stops when the rent stops.
“Typical London agent” uses the middle of the ranges published in 2026 guides. There’s no official survey of letting agent fees, so check real quotes: add one above to compare it. Referencing, inventory and certificate costs are left out of the totals because every agent charges them differently. Use the questions above to compare them. Sources: Landlord Studio, August, Let a Property, GOV.UK Renters’ Rights Act.
Cozee lets and manages London flats for owners at home and abroad. For the rest of the landlord picture, see our guides to renting out your property, tax on rental income and rental yield.
Leasehold reform: what has changed and what is coming
| Change | Status [confirm on publication] |
|---|---|
| Zero ground rent on new long residential leases | In force since 30 June 2022 |
| Two-year ownership rule for extensions and freehold purchase removed | In force since 31 January 2025 |
| Standard 990-year extension; marriage value abolished | Passed in 2024, not yet in force |
| £250 ground rent cap on older leases; new leasehold flats replaced by commonhold | Draft bill, January 2026 |
Until the 2024 valuation rules commence, a short lease still costs real money to extend. The House of Commons Library briefing tracks each stage.
Frequently asked questions
You own the right to live in a property for a fixed number of years under a lease. The freeholder owns the building and the land.
Aim for 90 years or more. Below 80 years extending gets more expensive, and many lenders become cautious below 70 to 80.
It depends on the flat’s value, the ground rent and the years left. Costs rise sharply once the lease falls below 80 years. Get a specialist surveyor’s valuation before serving notice.
If your lease started on or after 30 June 2022, ground rent is zero. Older leases can still charge it, as set out in the lease.
Usually, but check the lease for a subletting clause, consent fees or a ban on short lets.
In England and Wales you can usually stay, but the freeholder can offer an assured tenancy at market rent or seek possession on limited grounds. You lose the lease’s capital value.
Yes, collectively with other flat owners, as long as at least half of the flats take part and the building qualifies.
Last Updated on October 9, 2026