Leasehold glossary, in plain English.

A lease is the legal contract that gives you the right to occupy a property for a fixed period - often 99, 125, or 999 years. It sets out the rights and obligations of both the leaseholder and the landlord, including service charges, ground rent, repairs, alterations, and permitted use. If you want to change those terms, you usually need agreement from the relevant parties or a formal legal route.

Freehold means owning the building and the land it stands on outright, with no lease term running down. Freeholders do not pay ground rent and are not answerable to a superior landlord. In a block of flats, the freeholder is usually the landlord who appoints or oversees the managing agent.

Commonhold is an alternative to leasehold introduced by the Commonhold and Leasehold Reform Act 2002. Flat owners form a commonhold association that collectively owns and manages the freehold. There is no lease term running down and no ground rent. The government has published proposals to move new flats toward commonhold as the default structure in England and Wales.

Leasehold is a form of ownership where you own the right to live in a property for a fixed term, but not the land it stands on. Most flats in England and Wales are sold this way. As the lease gets shorter, its value and flexibility can change; once it drops below 80 years, extending it usually becomes much more expensive because of marriage value. If the term expires without an extension, the property reverts to the freeholder.

A share of freehold means the freehold of a building is jointly owned by its leaseholders - either through individual title deeds (up to four owners) or through a company in which each flat owner holds shares. Share-of-freehold owners make management decisions collectively and typically enjoy much lower costs and greater control than leaseholders in freeholder-managed buildings. It does not usually remove the lease itself, so the lease terms still matter.

Shared Ownership is a scheme where you buy a percentage share of a property (usually 25% to 75%) and pay rent to a landlord, often a housing association, on the remaining share you don't own. It's still a form of leasehold, so you hold a lease and can increase your share over time through a process called staircasing until you reach 100%.

A service charge is the annual fee leaseholders pay toward communal services, maintenance, building insurance, and management of their block. Typical items include cleaning, lighting, gardening, repairs, lift maintenance, and managing agent fees. Service charges must be reasonable - leaseholders have the statutory right to challenge unreasonable charges at the First-tier Tribunal. Detailed accounts must be made available to leaseholders on request under the Landlord and Tenant Act 1985.

A peppercorn ground rent is a nominal, effectively zero payment - the legal minimum. Since 30 June 2022, all new regulated residential leases must carry a peppercorn ground rent under the Leasehold Reform (Ground Rent) Act 2022. Leaseholders who extend their lease under the statutory process also convert their ground rent to peppercorn for the extended term, permanently eliminating it as an ongoing cost.

An administration charge is a fee charged by a landlord or managing agent for specific services beyond routine management - such as granting consent to sublet, approving alterations, providing mortgage references, or processing a deed of covenant. Administration charges are separate from service charges and must be reasonable. Leaseholders can challenge unreasonable administration charges at the First-tier Tribunal under Schedule 11 of the Commonhold and Leasehold Reform Act 2002.

A Freehold Estate Charge is a fee freeholders pay, usually on estates, to cover the upkeep of shared spaces like roads, drainage, and green areas that haven't been adopted by the local council. Unlike leasehold service charges, these charges apply even though you own your property outright, because a private management company (not the council) maintains the estate.

Ground rent is a periodic payment leaseholders make to the freeholder for use of the land their property sits on. It may be a fixed sum or escalate over time under a formula written into the lease. Many pre-2022 leases contain doubling ground rent clauses that can make properties unmortgageable and unsellable. The Leasehold Reform (Ground Rent) Act 2022 capped ground rent on all new regulated residential leases at a peppercorn (effectively zero) from 30 June 2022.

A reserve fund (also called a sinking fund) is money collected from leaseholders via service charges and held in a dedicated account to fund major future works - such as roof replacement, external redecoration, or lift refurbishment. A well-maintained reserve fund prevents sudden, large one-off demands. Leaseholders have the right to inspect reserve fund accounts and to challenge how contributions are being held or invested under the Landlord and Tenant Act 1985.

Major works are repairs or improvements to a building that exceed the Section 20 consultation threshold - where the cost to any individual leaseholder exceeds £250. Common examples include roof replacement, external redecoration, window replacement, and fire safety remediation. The landlord must follow the Section 20 consultation process before committing leaseholders to the cost. If the process is not followed correctly, the landlord's ability to recover costs is capped at £250 per leaseholder, regardless of the actual bill.

A Rentcharge is an annual or periodic payment secured against freehold land, separate from any rent under a lease, as defined by the Rentcharges Act 1977. Where it's used to fund the maintenance of shared estate facilities, it's often called an estate rentcharge, and it works similarly to ground rent but attaches to freehold rather than leasehold property.

Qualifying leaseholders of flats can usually extend their lease by 90 years on top of the current term and reduce ground rent to a peppercorn. A premium is payable to the freeholder under a statutory valuation formula. The process is started by serving a Section 42 notice giving the Freeholder time to respond with an acceptance or counter-notice.

The Right to Manage (RTM) allows qualifying leaseholders to take over day-to-day management of their building without buying the freehold - and without needing to prove the current management is failing. Leaseholders do this through an RTM company, which then takes responsibility for day-to-day management, budgets, contractors, and services. Crucially, the landlord cannot refuse if the statutory process is properly followed.

A Recognised Tenants' Association is a formal group of leaseholders in a building that has been recognised by the landlord or by the First-tier Tribunal. Recognition gives the group extra rights, including greater access to information and a stronger role in consultation.

A Commonhold Association is the company that owns and manages the common parts of a commonhold development, with every unit-owner automatically becoming a member. It operates under rules set out in a Commonhold Community Statement (CCS), which combines the physical description of the development with the regulations governing how it's run.

Collective enfranchisement is the legal process that allows qualifying leaseholders in a building to buy the freehold together. At least 50% of the qualifying leaseholders usually need to participate. Once completed, the participating leaseholders control the freehold and the long-term management position of the building.

A qualifying tenant is a leaseholder whose lease meets the legal conditions for certain statutory rights, such as lease extension, collective enfranchisement, or Right to Manage. In many cases, this means holding a long lease originally granted for more than 21 years, though there are exceptions. Confirming your qualifying status is the essential first step before starting any statutory process.

An RMC is a company, usually owned or controlled by the leaseholders in a building, that takes on responsibility for managing the property, such as arranging repairs, insurance, and service charge collection. Unlike an RTM company, which is set up later by leaseholders exercising a statutory right under the Commonhold and Leasehold Reform Act 2002 to take over management from the freeholder, an RMC is built into the lease from the outset by the developer, so its powers come from the lease itself rather than from an Act of Parliament. RMC members are typically shareholders (one flat usually equals one share) and membership can be restricted, whereas RTM company membership must be open to all qualifying leaseholders and can include the landlord too.

In collective enfranchisement, the nominee purchaser is the person or company named to buy the freehold on behalf of the participating leaseholders. In practice, this is often a company created for the transaction and future ownership.

Section 20 consultation is the process landlords must normally follow before carrying out qualifying works or entering certain long-term agreements that will cost leaseholders above the statutory threshold. It gives leaseholders a chance to comment, review estimates, and nominate contractors before the costs are locked in.

A Section 13 notice is the formal notice used to start collective enfranchisement under the 1993 Act. It sets out the participating leaseholders, the nominee purchaser, and the proposed price. Once it is served correctly, the freeholder is required to respond through the statutory process and legally prevented from selling the freehold to a third party while the process is live.

Assignment is the legal transfer of a lease from one leaseholder (the assignor) to another (the assignee). All covenants within the lease - including obligations to pay service charges and ground rent - pass to the new leaseholder on completion. Most leases require the landlord's prior written consent to assign, and an administration charge is typically payable. Consent cannot usually be unreasonably withheld.

A Section 42 notice is the formal notice a leaseholder serves to start the statutory lease extension process for a flat under the 1993 Act. It has to contain prescribed information, including the premium proposed by the leaseholder. Once served correctly, it fixes the valuation date and starts the legal timetable.

Forfeiture is the landlord's legal remedy to terminate a lease - and seize the property - when a leaseholder has breached a covenant. The most common triggers are unpaid service charges or ground rent. Forfeiture requires formal notice, court proceedings, and judicial determination. The consequences are extreme: a leaseholder can lose an asset worth hundreds of thousands of pounds over relatively small unpaid sums.

A licence to alter is the formal written consent a landlord grants a leaseholder wishing to carry out structural or material alterations to their property. Most leases prohibit alterations - including removing walls, installing bathrooms, or reconfiguring layouts - without prior written consent. The landlord may charge an administration fee and impose conditions. Retrospective consent (after unauthorised works) is harder and more expensive to obtain - and may not always be granted.

The demised premises is the legal definition in your lease of the specific space you own and are responsible for. This typically encompasses the internal walls, floors, and ceilings of your flat - but expressly excludes structural elements, external walls, and the building fabric itself. Anything outside the demised premises is a communal or common part, managed and maintained at the expense of all leaseholders through service charges.

A superior landlord is any landlord above your immediate landlord in the leasehold chain. In a multi-tier arrangement, your ground rent and some lease obligations may ultimately flow upward to a superior landlord - often the ultimate freeholder - rather than to the party you deal with day-to-day.

A restrictive covenant is a lease clause prohibiting specific activities or uses without the freeholder's prior written consent - such as subletting, keeping pets, running a business, or making alterations. Consent may be subject to an administration charge and conditions set by the landlord. Breach of a restrictive covenant can provide grounds for forfeiture proceedings or an injunction.

A headlease is a lease granted by the freeholder to an intermediate landlord. An underlease, sometimes called a sublease, is then granted out of that headlease to the occupying leaseholder. These layered structures are common in larger developments and converted buildings. They can obscure who holds management responsibility, create competing obligations, and complicate statutory processes like RTM and enfranchisement.

A covenant is a binding legal obligation written into a lease. Positive covenants require action - such as paying service charges, maintaining the interior, or insuring the property. Restrictive covenants prohibit certain actions - such as subletting, running a business from the flat, or making alterations without consent. Covenants bind not only the original parties to the lease but also all successors in title when the property is sold or assigned.

The Landlord and Tenant Act 1985 is one of the core statutes for leaseholders in England and Wales. It covers the reasonableness of service charges, rights to information and supporting documents, and the consultation rules for major works. It is often the starting point for service charge disputes.

The Leasehold and Freehold Reform Act 2024 made important changes to the leasehold system, including removing the two-year ownership requirement for some enfranchisement and lease extension claims and expanding certain information and enfranchisement rights. Not every change took effect at once, so some parts depend on commencement regulations.

Marriage value is the additional value created when a short lease is extended - because the combined worth of the extended leasehold and the freehold interests exceeds their total separate values before extension. Where a lease has fewer than 80 years remaining, the freeholder is entitled to additional compensation. The Leasehold and Freehold Reform Act 2024 proposes abolishing marriage value for statutory lease extensions - but this provision is not yet in force as of 2026.

The Leasehold Reform, Housing & Urban Development Act 1993 created the main statutory routes for flat leaseholders to extend their leases and to buy the freehold collectively. It also sets out the formal notice procedures used in those claims.

The Building Safety Act 2022 introduced landmark protections for leaseholders in higher-risk buildings - those over 18 metres or 7 storeys. It created the Building Safety Regulator (BSR) and significantly limited what qualifying leaseholders can be charged for historical safety defects, including cladding and fire safety remediation. Developers and building owners - not leaseholders - are primarily responsible for funding historical remediation in qualifying buildings.

The First-tier Tribunal (Property Chamber) is the specialist judicial body for residential property disputes in England. It hears cases about service charges, administration charges, lease terms, enfranchisement valuations, and management issues. Leaseholders can often represent themselves.