The leasehold trap: what to check before making an offer on a flat

Every year, buyers offer on flats — sometimes over the asking price, sometimes after two viewings — and discover only during conveyancing that the property they wanted comes with costs and complications their offer hadn't priced in. Most of those complications are leasehold problems. Most of them are visible before you make an offer, if you know where to look.

What leasehold actually means

When you buy a leasehold property, you are buying the right to occupy it for a fixed number of years. You do not own the land or the building — those belong to the freeholder. The lease is a contract that governs what you can and cannot do with the property, what you must pay the freeholder (ground rent), what the building management company charges for upkeep (service charge), and what happens when the lease expires.

The vast majority of flats in England and Wales are leasehold. Houses are increasingly sold freehold, but new-build houses on some estates were sold as leasehold until 2022 legislation started curtailing the practice.

The short lease danger zone

A lease starts long — typically 99, 125, or 250 years — and gets shorter every year. A flat sold with a 99-year lease in 1985 has 59 years left on that lease today. That is a problem.

The critical thresholds to know:

• Below 80 years: The cost of extending the lease increases sharply because the freeholder becomes entitled to “marriage value” — a share of the uplift in the property's value that the extension creates. Extending from 75 years typically costs significantly more than extending from 85 years on the same property.
• Below 85 years: Some mortgage lenders will decline to lend. The exact minimum varies by lender — some require 70 years at the end of the mortgage term, some 85 years remaining at purchase. Check with your broker before falling in love with a flat.
• Below 70 years: Remortgaging and selling become substantially harder. You are buying a problem that compounds every year you own it.

The lease length is shown on Rightmove and Zoopla listing pages. It is the first thing to check. If it is below 90 years, get a specialist lease extension valuation before you make an offer — not after. Costs for extension vary widely but for a London flat at typical values, extending from 80 to 90 years routinely costs £15,000–£30,000 including legal fees, and from 75 years can exceed £40,000.

Ground rent: what to look for and what to avoid

Ground rent is an annual payment to the freeholder, separate from your mortgage and service charge. On leases granted after 30 June 2022, ground rent is legally capped at a peppercorn (effectively zero) under the Leasehold Reform (Ground Rent) Act 2022. On older leases, ground rent can be anything from £1/year to several thousand — and how it escalates matters as much as what it currently is.

The clauses to look for in the lease:

• Doubling clauses: Ground rent doubles every 10 or 25 years. A £300/year ground rent that doubles every 10 years becomes £1,200/year after 20 years, £2,400 after 30. Mortgage lenders will not lend on properties where the ground rent exceeds or will exceed 0.1% of the property value. Some properties with doubling ground rents are effectively unmortgageable.
• RPI/CPI-linked clauses: Less aggressive than doubling, but review carefully and model what it becomes at typical inflation rates over 20–30 years.
• Review-linked clauses: Reviewed every few years against a comparables schedule set by the freeholder. Ask the seller's solicitor for the last three years' review notices.
• Peppercorn leases: The safest outcome. No meaningful ground rent payment and no risk of escalation.

Ask your solicitor to identify the ground rent clause and model it forward 20 years before you exchange. If the current ground rent is above £250 per year in London (£100 elsewhere) and the escalation clause is not peppercorn, treat this as a negotiating point — or a reason to walk away.

Service charge: what it is and how to check it

The service charge is what you pay the building management company (or freeholder) for maintaining the building, cleaning common areas, insuring the structure, and funding a reserve (“sinking fund”) for major future works. Unlike ground rent, service charges represent real costs that someone has to pay — the question is whether they are reasonable, well-managed, and predictable.

What to ask for before making an offer:

• The last three years' service charge accounts: You are looking for whether the estimates matched the actual charges, and whether the reserve fund is adequately funded. A building with a £0 reserve fund that has a roof nearing the end of its life is storing up a future “major works” demand that could run to tens of thousands per flat.
• Any Section 20 notices: When major works exceeding £250 per leaseholder are planned, the freeholder must issue a Section 20 consultation notice. Ask whether any notices have been issued or are expected.
• The management company name: Search Companies House and look for county court judgments. A management company with financial difficulties or CCJs against it is a red flag.
• The service charge estimate for the coming year: New-build developers frequently set artificially low estimates in year one, revised sharply upward once the managing agent takes over. Ask for any communications about planned revisions.

Service charges for a typical London flat range from £800 to £4,000 per year for a well-managed conversion. New-build developments with concierge, gym, or underground parking can run to £5,000–£10,000 or more. These costs should be modelled against the mortgage cost before you decide what to offer.

Your rights as a leaseholder

Most buyers do not know these exist:

• Right to extend your lease: After two years of ownership, you have the statutory right to extend your lease by 90 years at a peppercorn ground rent. The freeholder must agree — you can force the extension through a legal process if they delay or dispute the price.
• Right to manage: If at least 50% of qualifying leaseholders in a building agree, you can take over the management of the building from the freeholder without needing their permission. This lets you choose your own managing agent and service charge structure.
• Collective enfranchisement: If at least 50% of the building's qualifying leaseholders agree, you can collectively buy the freehold. This gives you full ownership of the building, eliminates ground rent, and gives you control over management.

Pre-offer leasehold checklist

Do these before you make an offer on any flat:

1. Check the lease length on the listing page. If below 90 years, get a specialist lease extension valuation.
2. Ask the estate agent: “What is the current ground rent and how does it escalate?” If they don't know, ask them to find out before your offer.
3. Ask for the last three years' service charge accounts and any Section 20 notices.
4. Ask your mortgage broker whether your preferred lender will lend on the lease length.
5. Ask whether any major works are planned in the next five years (roof, lifts, communal areas).
6. Once under offer, instruct a solicitor who specialises in leasehold — not a general conveyancer who handles mostly freehold houses.