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Understanding your lease

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This guide explains the most common terms of a flat lease. If you have taken the Understanding your lease quiz, you may have found there are parts of your lease you’d like to understand better.

If you are buying a flat, this guide should help you understand the lease you are purchasing and help you avoid many of the problems leaseholders ask us about.

This leaflet is not meant to describe or give a full interpretation of the law; only the courts can do that. Nor does it cover every case. If you are in any doubt about your rights and duties then seek specific advice.

Key terms

Lessor: Your landlord, typically the freeholder. There are situations where your immediate landlord is not the freeholder but the ‘head lessee’. A ‘head lessee’ will be the lessee with the longest lease, who has leased your flat to you and who pays ground rent to the freeholder.

Lessee: You, the leaseholder of a flat.

Right to Manage Company: The Right to Manage (RTM) is a way for leaseholders of a building to take over the management of that building. If the leaseholders have exercised RTM then a Right to Manage Company (RTM Co) will be responsible for the management of the building. Where the lessor’s consent is needed under the lease, for example for alterations, consent to sublet or consent to keep pets, the lessee will at first approach the RTM Co for this consent. The RTM Co will then need to give notice to the lessor about this.

Do you have a copy of your lease?If you do not have a copy of your lease you may be able to obtain one from your conveyancing solicitor or mortgage lender. Usually the Land Registry will also keep a copy. Before purchasing a leasehold property, you should make sure you understand the key clauses of your lease.

Which area of your lease would you like to learn more about? Click the links below for guidance on various elements of your lease. Please note that not all leases are the same and this guide contains examples of common lease terms.

  1. Parties to the lease
  2. The property
  3. Rights granted with the property
  4. Regulations
  5. Lessee’s obligations
  6. Access
  7. Landlord’s obligations
  8. Length of lease

Parties to the lease:

“Parties” means the people and/or companies involved in the contract. Your lease will usually state the names of the original parties to the lease on the first page. Please note if you have bought the lease from someone else and are not the first leaseholder it won’t be your name that appears in the lease. However, your solicitor will have registered you as the lease owner with the Land Registry. Usual parties will be yourself and the landlord but can also include a management company. This could be a management company made up of the leaseholders in the building.It is very important that you understand the parties to your lease. If you are buying a flat then make sure your solicitor explains this to you.

The property:

your lease will usually have a description of the physical extent of your flat, as well as any other areas, such as a basement. This is often referred to as the demised premises. This will normally be described near the beginning of your lease or later on in a Schedule. It may also make reference to a plan.Example text you might see in a lease: ‘All that ground floor flat known or intended to be known as Ground Floor Flat 4 Wilson Road, London … edged red on the plan annexed hereto’

Rights granted with the property:

usually refers to your rights in relation to access over common areas or other parts of the building. It may include rights of way. Rights granted to a leaseholder under a lease are usually called easements in a lease. For example, the flat owner may need to walk down a path they don’t own and up a staircase they don’t own to get to their flat. It is clearly necessary for a leaseholder to have rights over property they don’t own otherwise they may find they are unable to access or use their own property. The lease must therefore provide you with a right of way for the purpose of access. The right will often be specific about which kinds of transport the leaseholder is entitled to use.Example, ‘on foot only’ or ‘on foot or using a private motor vehicle’.Your landlord cannot simply obstruct rights granted to you or take them away. If your landlord attempts to do so you may be entitled to compensation or possibly even an injunction to protect your rights.


The regulations section usually contains the dos and don’ts of how you live in your flat. Some sample common regulations are below:


There may be a requirement to keep floors carpeted. This is particularly common where the building is a house that has been converted into flats.Example: ‘the leaseholder covenants to keep the floors of the demised premises carpeted at all times’.Sometimes this is varied slightly to allow for other materials to be used.
Example: ‘the leaseholder covenants to keep the floors of the demised premises carpeted or covered with some other suitable sound deadening material at all times.’Even where the leaseholders buy the freehold of their building, they are still bound by any requirement in their lease to keep the floors carpeted.

If there is no such provision in the lease then the leaseholder would be entitled to lay wooden or laminate flooring. However, you need to be sure your lease does not require you to first obtain consent for alterations. You also need to be sure this would not breach any nuisance clause in the lease.


The lease may restrict the leaseholder from keeping pets or require consent to do so. There are several common variations on this restriction. Some give the landlord discretion to revoke consent in the event that the pet causes a nuisance.

Example: ‘not to keep any bird dog or other animal in the Demised Premises without the previous consent in writing of the Lessor… such consent to be revocable by notice in writing at any time on complaint of any nuisance or annoyance being caused to any owner tenant or occupier of any other flat in the building.’

Where there is a RTM Co it will be the RTM Co who would be approached to consent, subject to your landlord not objecting to the granting of consent.


Most leases have a clause regarding nuisance. This is to stop the leaseholder causing problems for other leaseholders in the building.

Example: “Not to use the Flat nor permit the same to be used for any purpose… other than as a private dwelling house in the occupation of one family only nor for any purpose from which a nuisance or annoyance can arise to the lessor or the owners lessees or occupiers of other flats in the building…nor for any illegal or immoral purpose.’

Lessee’s obligations:

these spell out what the leaseholder is responsible for. Common areas will be:

Ground rent

: A payment generally made by the leaseholder to the freeholder under the terms of a lease.But why the term ‘ground rent’? The answer is that the freeholder owns the ground on which your leasehold house or flat sits on, whilst you have the right to the house or flat – exclusively – for the duration of the lease. Historically many ground rents were set at a ‘peppercorn’ to save the landlord having to collect the rent. However, it is also common is for the lease to provide that the annual ground rent increases at intervals to a fixed amount. For example under a 99 year lease, the initial ground rent may be £100 pa going up after 33 years to £150 pa and after 66 years increasing to £200 pa and remaining at that level for the rest of the term.

More problematic are ground rent increases in accordance with a formula making it difficult to predict with certainty what future ground rent could be but leaving the door open to large increases. Some of these ground rents may increase in accordance with a recognisable and published formula such as the retail prices index. Of more concern is where the ground rent increases to a percentage of, say, open market value. Or doubling every 10 years or at more frequent intervals. The resulting annual ground rent may make it more difficult to sell or mortgage the property.

If you are considering buying a leasehold property with ground rent, then make a point of insisting on your solicitor/conveyancer drawing to your attention the implications of any terms in the lease providing for ground rent increases over the life of the lease.

Event/Exit fees

A fee payable under a term of a residential lease on certain events such as resale or sub-letting. This is very common with retirement properties. Event fees may be referred to by a variety of names including exit fees, transfer fees, deferred management fees, contingency fees and selling service fees.

Research has shown that:

Some event fees may be applied towards the sinking fund of a development or used to ensure that service charges are not too expensive. A distinction should be made between such fees and those not linked to any benefit or service provided by the landlord and are purely for the landlord’s profit.

If you are considering buying a leasehold property, particularly in a retirement development, then make a point of raising with your solicitor/conveyancer if there are implications of any terms in the lease establishing event fee/exit fee.

Service charges

: Describes a payment the lessee makes under the terms of the lease towards the landlord’s costs in operating/maintaining the building. For example the costs of building insurance, lift maintenance, cleaning common areas, repairing the roof or redecorating the outside of the building and others.

Example: ‘pay the lessor a fair and reasonable proportion of the costs and expenses incurred by the lessor in the performance of the lessor’s covenants herein contained…’

A service charge demand must be accompanied by a summary of the leaseholder’s rights and obligations.

Reserve or sinking fund:

Some leases may contain a provision that leaseholders may into a sinking fund each year. This is a way to build up a fund that is used to cover the cost of major repairs, for example replacing the boiler or the roof at some time in the future.

Administration charges:

Describes a payment the lessee makes under the terms of the lease towards various expenses incurred by the landlord. It may include a right for a landlord to charge interest on unpaid service charges. It may also include a right for a landlord to recover legal costs for taking action to enforce obligations owed by a lessee under the lease.

Example: ‘To pay all costs and expenses that the lessor may incur by reason of any breach of the lessee’s covenants whether or not proceedings are started in a court or tribunal’


There are essentially three different ways that a lease may affect a leaseholder’s right to make alterations.

  1. The lease may make no mention of alterations, in which case the leaseholder is able to make any alterations provided they do not damage the building or cause the flat to become less valuable.
  2. The lease may contain a total prohibition against alterations. It is important to know whether this applies to alterations in general or just structural alterations.For example, compare ‘not to carry out any structural alterations or make any structural additions’ with ‘not to carry out any alterations or make any additions’. The latter is much more extensive. If this type of clause appears in the lease your landlord would be entitled to withhold consent to any alterations without giving any reason. They would also be allowed to charge a fee for granting consent.
  3. The lease may require consent before making alterations. As above this could apply to all alterations or just structural alterations.Example: ‘not to make any structural alterations or structural additions to the property or any part thereof without the previous consent in writing of the lessor.’Where there is a RTM Co, you would need to approach the company for consent to make alterations. Where your lease includes you, your landlord and a management company as parties to the lease, consent may be required from the management company.It’s very important to draw a distinction between structural alterations and more general alterations. Structural alterations usually involve work to the load bearing elements of the property, but can include non-load bearing elements where the essential appearance and shape of the property is altered. Non-structural alterations are to the fixtures and fittings in the property.Where alterations are not completely prohibited, your landlord’s consent will be required but your landlord will not be entitled to withhold consent unreasonably where the alteration improves the property. Your landlord may attach conditions to granting consent such as the need for a formal ‘licence’ to make alterations. Your landlord would be entitled to charge a reasonable fee for granting consent to cover his out of pocket legal and valuation expenses.


: There are usually three different ways a lease may restrict the leaseholder’s ability to sublet, or there may be no restrictions at all. Please note that whatever the lease says about subletting, there may still be restrictions on the use of the flat.

  1. If the lease contains no restrictions at all in regard to subletting, then you can assume that you will not need to obtain consent.
  2. The lease may prohibit subletting altogether.Example: ‘Not to underlet the whole of or any part of the demised premises’.This is usually the position where the lease is a shared ownership lease and the leaseholder owns less than a 100% share of the flat. Your landlord would not have to be reasonable in withholding consent. This means you will not be able to challenge the landlord in a Tribunal on this point. You will only be able to sublet if the landlord gives consent.
  3. The lease may prohibit subletting part only of the flat.Example: ‘Not to assign underlet or part with possession of part only of the demised premises’.If this restriction appears the leaseholder is not allowed to sublet anything less than the whole of the flat, for example, you could not just let a bedroom.
  4. The lease may contain a qualified restriction against subletting which allows subletting provided your landlord’s consent is first obtained.Example: ‘Not to underlet the demised premises without first obtaining the landlord’s consent in writing’.Where there is a RTM Co it will be the company who would be approached to grant consent.Where consent is required under the lease to sublet your landlord cannot unreasonably withhold consent. For example a reasonable withholding of consent would be where the proposed tenant is a commercial tenant and is likely to break the terms of the lease. It is worth noting that your landlord can attach conditions to consent, such as obtaining a licence to sublet from the landlord. They are also able to charge a reasonable fee to cover their costs in relation to granting consent.

Use of flat

: Whatever the lease says about subletting, there may still be restrictions on the use of the property.

For example: ‘Not to use the demised premises other than as a private residence in the occupation of a single family only’

Such a restriction would, for example, prevent you from subletting your flat to a group of otherwise unrelated students.

Most leases will also ban use of the flat in a way that would cause a nuisance or annoyance to other occupiers in the building.


your landlord will usually have the right to access your flat for certain purposes.Example: ‘the lessor and the lessor’s duly authorised Surveyors or Agents may with or without workmen upon giving forty-eight hours previous notice in writing enter the demised premises for the purpose of (x)’.Your landlord will usually have the right to access your flat to check the state of repair of the flat and to carry out repairs to other parts of the building. Your landlord has to be careful not to abuse this right, as you always have a right to live in the flat without lawful interference by your landlord.Where your lease includes as a party not only you and your landlord but also a management company this right may be passed to the management company.

Landlord’s obligations:

The landlord will have certain obligations under the lease. Common obligations will be:Quiet enjoyment: Your right to use (“enjoy”) the property without any disturbance from the landlord or anyone who works for them. In practice other obligations might come before this one, for example a landlord having to make repairs that cause some disturbance to tenants.

Example: ‘the lessee paying the rents hereby reserved and performing and observing the several covenants on the lessee’s part and the conditions herein contained shall peaceably hold and enjoy the Flat during the said term without any interruption by the Lessor or any person rightfully claiming under or in trust for the lessor.’


Whilst the leaseholder will typically be responsible for repairing the non-structural parts of their property, responsibility for repairing the structure, including the roof and exterior of the building, depends on the terms of the lease.In blocks of flats the most common scenario is for your landlord to be responsible for maintaining and repairing the exterior and structure of the building.

This is not always the case though. For example, in a house converted into two flats the leaseholders might be responsible for repairing and maintaining the structure. Alternatively, the leaseholder on the lower floor might be responsible for repairing and maintaining both the interior and exterior of the building up to the first floor level, and the leaseholder of the upper floor is responsible for everything above first floor level. In those circumstances the lease should specify who is responsible for any common parts and how the costs should be split between the leaseholders.

Example: ‘the lessor will maintain and keep in good and substantial repair and condition the main structure of the Building including the foundations and the roof thereof with its gutters and rainwater pipes.’

What is structural will depend on the nature of your particular building.


In a block of flats, the landlord is usually responsible for insuring the building although this could be the responsibility of an RTM Co or a management company if either is present.

Example: ‘the lessor will at all times during the said term insure and keep insured the building against loss or damage by fire or such other risks (if any) as the lessor shall think fit in some insurance office of repute’.

If your landlord is responsible for insuring the building, the leases will almost always allow your landlord to recover a share of the cost from each of the leaseholders.

In some leases, usually where there are just two flats in the building, each leaseholder may be responsible for insuring part of the building themselves. This is most often the case where the lease is what is called “self-repairing” and the leaseholder owns both the interior and exterior of their own flat. Where this is the case the leaseholder is likely to be responsible for the cost of insuring their part of the building themselves.

A third possibility, again usually where there are just two flats in the building, is that the leaseholders are responsible for insuring the whole building. The cost of insurance in that case is typically shared between the leaseholders.


The lease will usually indicate who is responsible for managing the building. It is often your landlord who is responsible for this. They may employ a managing agent.

Length of the lease:

this will usually be outlined on the first or second page of the lease. It is very important that you should know how many years remain on the lease. If you are a prospective purchaser, it is important to know this from the outset. The value of your property decreases as the term of the lease gets shorter. If the lease runs out then the flat becomes the property of the landlord. If your lease has less than 99 years remaining then you might think about extending the lease. This is particularly important if your lease has just over 80 years remaining, as lease extension becomes much more expensive when a lease falls below 80 years. Get more information on lease extension, or use our lease extension calculator to get a rough idea of the cost of a lease extension for you.Example: ‘125 years commencing 1st May 2003.’

We hope you have found this guide useful. Now you have read the guide you could try the Understanding your lease quiz again and see how much your score has improved!

LEASE is governed by a board, appointed as individuals by the Secretary of State for the Ministry of Housing, Communities & Local Government.