Borrowing on a leasehold home: lease length and ground rent

If you buy a leasehold home, you have the right to live in it for a set number of years written into the lease, but you do not own the land it stands on¹. That single difference shapes everything about how a mortgage on the property works: how long the lease has left, what you pay each year on top of the mortgage, and what you are allowed to do with the home.

The number that matters most to a lender is the unexpired term. Many mortgage providers will refuse to lend on a property with fewer than 80 years left on the lease¹, and several set their own floor higher, at 85 years remaining at the start of the mortgage². A lease with fewer than 80 years remaining can seriously affect both the value of the property and the amount it will sell for¹.

Leases are normally granted for 99 years, and residential leases are usually drawn up for up to 125 years when first created¹. Terms vary widely and can run to 999 years⁶. On top of the mortgage you may pay ground rent or a management fee, and service charges⁷. This page sets out what each of those means, what lenders look for, and what happens as the years run down.

What leasehold means: you own the home, not the land

A leasehold purchase gives you the property for the remaining term of the lease⁹. You own the building but not the land it stands on, and only for a certain period, anything up to 999 years¹⁰. The freeholder, or landlord, owns the land and the structure's freehold interest.

There is a middle option. With a share of freehold, you own the property leasehold plus a share of the freehold for the building, which is typically how flats are bought this way¹. Shared ownership properties are usually leasehold too, which means shared owners are leaseholders¹¹.

Leasehold is not only a flat arrangement. Of leasehold homes in England, 70% are flats and 30% are houses⁸. Flats are more likely to be sold on a leasehold basis, but houses are sold leasehold as well⁵.

The legal definition of a residential property owner in England or Wales includes freehold, leasehold where the lease was originally granted for a term certain exceeding 21 years, and commonhold¹². That matters because long leases carry rights that shorter arrangements do not.

Lease length and mortgages: lenders may struggle below 80 years

Lending criteria on lease length are set lender by lender, and the differences are real. Many mortgage providers will refuse to lend on a property with fewer than 80 years left¹. Properties with fewer than 80 years on the lease can be difficult to get a mortgage on¹³, and you may find it hard to get a mortgage if there are fewer than 80 years left on the lease of the property you want to buy¹⁰.

Several lenders publish a higher floor. Accord Mortgages asks for at least 85 years unexpired on the lease remaining at the start of the mortgage². Suffolk Building Society asks for a minimum of 85 years left on the lease at the start of the mortgage⁴. Principality asks for 85 years at the start of the mortgage loan, with all leasehold properties needing at least 85 years remaining at the time of application¹⁴. Atom Bank asks for at least 80 years unexpired at the outset of the mortgage and 50 years unexpired at the expiry of the mortgage¹⁵. Teachers Building Society, for previously owned properties, asks for a minimum term outstanding on the lease of 80 years when the mortgage starts¹⁶.

Equity release has its own version of the rule: providers might want an unexpired term of at least 75 or 80 years¹⁷. Lifetime mortgages are generally only available if you are 55 or over¹⁸.

The practical effect is that a short lease narrows your pool of lenders before you have even applied. It also affects the property's value and what it will sell for¹. If you are weighing up how much you can borrow against the property, the lease term sits alongside income and deposit in the lender's assessment.

What happens when a lease runs out

A lease is a fixed term, not a permanent right. When the term ends, the right to live in the home ends with it unless the lease has been extended or the freehold bought.

The rules on extending have changed. The Leasehold and Freehold Reform Act 2024 removed the requirement for a new leaseholder to have owned their house for two years before they can extend the lease or buy the freehold¹⁹. Planned legislation would give leaseholders of flats and houses the same right to extend their lease agreements as often as they wish, at zero ground rent, for a term of 990 years⁸. The standard lease extension term is to increase to 990 years, from 50 years for houses or 90 years for flats¹.

Government guidance describes a long lease on a flat or leasehold house as usually 125 years²⁰. The Home Ownership for people with a Long-term Disability scheme asks for leasehold homes with at least 990 years remaining, unless no homes with that lease length are available, in which case a minimum of 125 years applies²¹.

Ground rent, service charges and other costs on top of your mortgage

A leasehold home carries costs a freehold does not. With leasehold properties you might have to factor in paying ground rent or a management fee on top of your mortgage⁷. Buying a home brings ongoing costs such as paying the mortgage, rates, repairs and service charges⁶.

When a lender assesses what you can afford, it looks at the monthly repayment amount, any fees including to set up or change the deal, the term of the loan and changes to interest rates²³. Ground rent and service charges sit inside that picture.

If you extend the lease, the premium is only part of the bill. On top of the cost of buying the extra years on your lease you have to pay legal advice from a solicitor, a lease extension valuation report from a surveyor, the freeholder's reasonable legal and own valuation costs, and Land Registry fees²⁴. The cost of extending your lease depends on the value of the property, the number of years left on the lease, the annual ground rent, the value of improvements paid by the leaseholder, and expected rates of return on investments²⁴.

There is help in some circumstances. If you own a leasehold property, you may be able to get help to pay some service charges and ground rent through the Support for Mortgage Interest loan²⁵.

Lease terms that can limit what you do with the home

The lease is not only about time and money. It can also restrict how you use the property. There could be clauses written into the lease that affect what you can do, for example pets, subletting or changing the layout²⁶.

If there is a mortgage on the property, the lender's rules apply as well. Letting out a home with a residential mortgage breaches the terms of the loan²⁷, and renting your home without permission may break your mortgage rules²⁸. Where a lender grants consent to let, the restrictions can be tight: once your property is rented out you will not be able to switch your mortgage deal, apply to borrow more except possibly for home improvements or repairs, complete a term change, or add or remove a borrower²⁹.

Some lenders set out when consent is not needed at all. Lloyds Bank says you do not need its agreement if your mortgage is closed, you owe less than £5,000, your mortgage will be paid off in full in less than 12 months, the mortgage is buy to let, or you are renting as a holiday let for no more than 16 weeks during the next 12 months³⁰. Its second home mortgage excludes letting a holiday home for more than four months a year or letting the property through Airbnb for any duration³¹. Consent to let also usually requires the mortgage to have been active for at least 6 months, unless you are a member of the British Armed Forces, the Diplomatic Service, or have tied accommodation³⁰.

Buy-to-let lending has its own conditions. Family Building Society accepts assured shorthold tenancies only, with each tenancy period not less than six months and not more than 12 months, except where the tenancy is to a limited company or to individuals subject to rent exceeding £100,000 per year³².

Who provides leasehold mortgages in the UK

Leasehold lending is not a niche product. Building societies and banks across the market lend on leasehold flats and houses, and the differences between them come down to criteria rather than product type. Accord Mortgages, Suffolk Building Society, Principality, Atom Bank and Teachers Building Society all publish lease length rules². Equity release providers apply their own version of the rule, wanting an unexpired term of at least 75 or 80 years¹⁷.

Because criteria differ, the same property can be acceptable to one lender and refused by another. A broker or adviser can match a specific lease to lenders whose published criteria it meets. If you are comparing how much you can borrow, the lease term is one of the inputs alongside income, deposit and the loan to value.

Where to get help

Free, impartial help is available. Shelter Cymru and Housing Rights offer housing and mortgage advice⁹. Independent Age provides advice on help with rent or mortgage costs²⁵. The Financial Ombudsman Service handles complaints about mortgages, including equity release¹⁸.

If you are struggling with payments, the Support for Mortgage Interest loan can help leasehold owners with some service charges and ground rent²⁵. Mortgage lenders may try to recover a mortgage shortfall for up to 20 years in one source and up to 12 years in another; the two documents disagree³³.