Leasehold Glossary

A

Apportionment

The calculation used to split service charges fairly when a leasehold flat is bought or sold partway through a billing period, so buyer and seller each pay only for the days they owned the property.

Assignment

The legal transfer of a lease from one person to another — what happens when a leasehold flat is sold. Many leases require the freeholder to be notified, sometimes for a fee.

Assured Tenancy

A form of tenancy with stronger landlord repossession rights. Under the "Housing Act trap," ground rent above £250 a year (£1,000 in London) can technically turn a long lease into an assured tenancy, which is why many lenders avoid such leases.

B

Break Clause

A clause allowing either party to end an agreement early under specific conditions. Rare in residential leases but sometimes found in related contracts such as management agreements.

Building Safety Act 2022

Legislation introduced after the Grenfell Tower fire that protects qualifying leaseholders in relevant buildings from many historical cladding and fire safety remediation costs.

C

Capitalisation Rate

The rate used to convert a stream of future ground rent payments into a single present-day value when calculating a lease extension premium. Typically 6–8% depending on the lease.

Collective Enfranchisement

The statutory right for a qualifying group of leaseholders to club together and buy the freehold of their building, even if the freeholder does not want to sell.

Commonhold

An alternative form of ownership, distinct from leasehold, where each flat owner holds the freehold of their unit outright and jointly manages shared areas through a commonhold association. Rare in the UK but promoted as a long-term alternative to leasehold.

Counter-Notice

A freeholder's formal written response to a leaseholder's claim — such as a lease extension or Right to Manage claim — either accepting the terms proposed or setting out counter-proposals.

D

Deed of Covenant

A legal document, often required on sale of a leasehold flat, in which the new leaseholder promises the freeholder they will comply with the terms of the lease. Usually attracts a fee.

Deed of Variation

A legal document changing the terms of an existing lease, for example to remove an onerous ground rent clause, agreed between leaseholder and freeholder.

Deferment Rate

The rate used to discount the value of the freeholder's right to eventually get the property back ("the reversion") to a present-day value. The standard rate for flats, set in the Sportelli case, is 5%.

Doubling Clause

A ground rent review clause under which the rent doubles at set intervals, often every 10 to 25 years. Considered high-risk by mortgage lenders because of how quickly it can escalate.

E

Enfranchisement

The general term for a leaseholder's statutory right to acquire either a longer lease (lease extension) or the freehold itself (collective enfranchisement).

EWS1 Form

External Wall System form — a certificate confirming whether a building's external wall materials have been assessed as an acceptable fire risk. Often requested by lenders for buildings over 11 metres.

Estate Rentcharge

An annual charge on a freehold property (common on some new-build estates) that pays for the upkeep of shared areas such as roads and open spaces not adopted by the council.

F

First-tier Tribunal (Property Chamber)

The tribunal that hears leasehold disputes, including service charge challenges and lease extension valuations, without the cost or formality of the courts. Previously known as the Leasehold Valuation Tribunal (LVT).

Forfeiture

A legal process allowing a freeholder to end a lease and repossess the property, typically only after a serious, prolonged breach such as substantial unpaid arrears. Rare in practice and subject to strict legal safeguards.

Freehold

Outright ownership of a property and the land it stands on, for an indefinite period, with no landlord above you.

Freeholder

The owner of the freehold — effectively the landlord in a leasehold arrangement, to whom the leaseholder pays ground rent and who is typically responsible for the building's structure and common areas.

G

Ground Rent

An annual payment made by a leaseholder to the freeholder simply for occupying the property, separate from any service charge. Most leases granted since 2022 are restricted to a peppercorn (£0) ground rent.

H

Head Lease

The primary lease under which a building is held, from which shorter individual flat leases (sub-leases) may be granted.

L

Landlord's Certificate

A document a freeholder must provide under the Building Safety Act confirming whether a leaseholder qualifies for statutory protection from historical building safety remediation costs.

Lease

The legal contract granting a leaseholder the right to occupy a property for a fixed term, setting out the rights and obligations of both leaseholder and freeholder.

Lease Extension

The statutory or negotiated process of adding years to a lease term, usually in exchange for a one-off premium paid to the freeholder.

Leaseholder

The person who owns the lease — commonly described as "owning" the flat, though technically holding a long tenancy from the freeholder.

Leaseholder Deed of Certificate

A document a leaseholder provides to their freeholder confirming details relevant to Building Safety Act protections, such as whether the property is their only or main home.

LPE1 (Management Pack)

The standard form used to request information from a freeholder or managing agent when a leasehold flat is being sold — covering ground rent, service charges, planned works and any disputes.

M

Managing Agent

A company appointed by the freeholder (or by leaseholders themselves under Right to Manage) to handle the day-to-day running of a building, including collecting service charges and arranging repairs.

Marriage Value

An additional sum payable to the freeholder when extending a lease with fewer than 80 years remaining — 50% of the increase in the flat's value created by the extension.

N

Notice of Intention

The first formal notice a freeholder must serve under a Section 20 consultation, describing proposed major works and inviting leaseholder observations.

Notice of Proposals

The second formal notice under a Section 20 consultation, setting out at least two contractor estimates for proposed works, following leaseholder observations.

P

Peppercorn Rent

A ground rent of no financial value — effectively £0. Most new residential leases granted since the Leasehold Reform (Ground Rent) Act 2022 must be peppercorn.

Q

Qualifying Long-Term Agreement

A service contract lasting more than 12 months (such as a cleaning or lift maintenance contract) that triggers Section 20 consultation if any leaseholder's annual contribution exceeds £100.

Qualifying Works

Repairs or improvement works that trigger Section 20 consultation if any individual leaseholder's contribution would exceed £250.

R

Relativity

The value of a leasehold flat expressed as a percentage of its equivalent freehold value, based on the number of years remaining on the lease. Falls as the lease shortens, and drops more steeply below 80 years.

Reserve Fund (Sinking Fund)

Money collected through service charges and set aside for future major works, rather than day-to-day running costs, so large bills can be spread over time.

Reversion

The freeholder's right to regain full possession of a property once a lease ends. Compensation for delaying this reversion forms part of a lease extension premium.

Right of First Refusal

A statutory right requiring a freeholder to offer leaseholders the chance to buy the freehold themselves before selling it to a third party, in qualifying buildings.

Right to Manage (RTM)

The statutory right for qualifying leaseholders to take over management of their building through a company they control, without proving fault or buying the freehold.

S

Section 20

The part of the Landlord and Tenant Act 1985 requiring freeholders to formally consult leaseholders before carrying out major works or entering long-term service contracts above set cost thresholds.

Section 21

The right to request a written summary of service charge costs from your freeholder, which they are legally required to provide.

Section 22

The right to inspect the invoices, receipts and other documents supporting a service charge summary provided under Section 21.

Section 42 Notice

The formal notice a leaseholder serves on their freeholder to begin the statutory lease extension process, proposing a premium.

Service Charge

The amount a leaseholder pays towards the cost of maintaining, insuring and managing the building and communal areas, usually calculated as a proportionate share of total building costs.

Sportelli

A 2007 Lands Tribunal case that established the standard 5% deferment rate used in most residential lease extension and enfranchisement valuations across England and Wales.

Sub-lease

A lease granted out of a head lease — typically the individual flat lease held by a leaseholder within a larger building.

T

Tenant

The formal legal term for a leaseholder in most leasehold legislation — despite "owning" a flat in everyday language, a leaseholder is technically a long-term tenant of the freeholder.

V

Variable Service Charge

A service charge that changes year to year based on actual costs incurred, as opposed to a fixed service charge set at a flat annual amount regardless of spending.

Put these terms into practice

Now that the jargon makes sense, use our free tools to apply it to your own situation:

Lease Extension

See marriage value, relativity and deferment rates applied to your own lease.

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Service Charge Calculator

See apportionment and reserve fund contributions calculated for your building.

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Pro Tip

New to leasehold altogether? Start with What is Leasehold? for the fundamentals before diving into the detail here.