Understanding your Lease
Leases are legal documents and can be complicated. It is important that you keep your lease safe and understand the terms it sets out. All leases are different but often contain the same terms, phrases and formats. You may find the following guide helpful when reading your lease.
If you are purchasing a leasehold or shared ownership property you should make sure your conveyancing solicitor explains your lease to you.
This guide is not intended to duplicate or replace your lease.
What is a lease?
The Lease is your legal agreement with the Landlord (sometimes known as the ‘freeholder’). This tells you how many years you’ll own the property and sets out both the obligations (often referred to as covenants) of you and the Landlord.
You own a leasehold property for a fixed period, often referred to within the Lease as the “Term”. The Term will typically be for 99 or 125 years from the “Commencement Date”.
The Commencement Date is the start date of the Lease. Please note that this is not necessarily the date of the Lease. For example, your Lease date may be the 1st April 2001, however the Commencement Date could be the 1st January 2000, in which case the term of the Lease will be 99 or 125 years from the 1st January 2000. You will usually find the Commencement Date in the lease particulars or defined terms.
You, the leaseholder of the property. Sometimes referred to within the lease as Tenant.
Your landlord, typically the freeholder.
“Parties” means the people and/or companies involved in the lease. 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, make sure your solicitor explains this to you.
'Term' refers to the length of your lease. This will usually be outlined on the first or second page of the lease. It is very important that you know how many years remain on the lease.
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. This is particularly important if your lease has just over 80 years remaining, as lease extension becomes more expensive when a lease falls below 80 years. You may also find it difficult to obtain a mortgage as the term decreases
You may be able to apply for a lease extension and your housing officer will be able to discuss this with you further. It is important to get legal advice as there are restrictions on applying for an extension if you have only just recently purchased 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 or garage.
This is often called the ‘demised premises’ or ‘demise’. This will normally be described near the beginning of your lease or later in a Schedule.
The lease may also include to a plan to show the flat. 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’
Your lease will usually have a description of the “Reserved Property” or “Retained Land” this is the land owned by the Landlord which has not been demised to you or any other flat owner.
Example text you might see in lease: “The Council will retain the parts of the said block of flats used in common by the occupants of all of the flats and such other parts of the said block of flats which are not demised as aforesaid”. This could include communal entrances, halls and stairways.
Usually refers to your rights to access common areas or other parts of the building. It may include rights of way. Rights granted to a leaseholder are often 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 needs to make sure there is a right of way for 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’.
This means the rights that are kept or ‘reserved’ by the landlord. An example of such a right is the right to enter the property for viewing, inspecting, repairing and maintaining Service Media (drains, sewers, cables, pipes etc.), running through or under the property.
The regulations section usually contains the does and don’ts of how you live in your home. Some sample common regulations are:
There may be a requirement to keep floors carpeted.
Example: ‘the leaseholder covenants to keep the floors of the demised premises carpeted at all times’.
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 obtain consent from the landlord for alterations. You also need to be sure this would not breach any nuisance clause in the lease.
PetsThe lease may say that the leaseholder can keep pets with permission from the landlord, or it may say that pets are not allowed. Where pets are allowed the lease with usually give the landlord discretion to withdraw consent if 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.’
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 owner’s lessees or occupiers of other flats in the building…nor for any illegal or immoral purpose.’
If you are in doubt about what you can and cannot do, we would advise you first check with your landlord to confirm.
These spell out what the leaseholder is responsible for. Common areas will be:
Ground rentA payment generally made by the leaseholder to the freeholder under the terms of a lease. The freeholder owns the ground your leasehold house or flat sits on, whilst you have the right to the house or flat – exclusively – for the duration of the lease. Your Lease will set out what this cost is, it may be as little as£10 a year but can be higher.
The lease will also explain how and when the ground rent can be increased, it’s important you know what the arrangements are for your ground rent.
The Landlord can take legal action against you for nonpayment of the Ground Rent.
Service chargesYour lease sets out the way the service charge is calculated and what the Landlord and/or Management Company can charge you. Typically, these include the cost of building insurance, cleaning common areas, grounds maintenance andrepairing and redecorating the outside/common areas of the building.
Example clause in the Lease: ‘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…’
The Lease may set out exactly the proportion of costs the leaseholder will be charge, e.g. 1/6th. Or is may say something like a ‘fair’ or ‘reasonable’ proportion.
Some leases stipulate that leaseholders pay 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 roof at some time in the future.
You won’t be able to get back any money you pay into a fund if you move to a new house, the sinking or reserve fund remains with the property.
If your lease does not specify that a sinking fund is needed it is sensible as a homeowner to set aside funds each year to cover future maintenance.
The Lease will usually include a note about administration charges. An administration charge 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 incurred when taking steps to deal with any breaches of the lease such as nuisance or anti-social behaviour.
It may also include a cost for undertaking and arranging any maintenance works.
There are essentially three different ways that a lease may affect a leaseholder’s right to make alterations.
- 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 make the flat less valuable.
- The lease may contain a total ban on 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 second is much more restrictive. If this type of clause appears in the lease your landlord would be entitled to withhold consent to any alterations without giving any reason.
- 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’.
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, for example removing a wall between rooms.
Non-structural alterations are to the fixtures and fittings in the property. Your landlord may attach conditions to granting consent such as the need for a formal ‘license’ to make alterations. Your landlord would be entitled to charge a reasonable fee for granting consent. More information about how Aster manages alterations is available on our website.
It is very important to get permission before carrying out any alterations. You could be asked to put the property back to its original condition at your own expense if you do not.
Your lease will explain any conditions or restrictions about subletting. Shared ownership leases do not allow for subletting
If the lease contains no restrictions at all about subletting, then you can assume that you will not need to obtain consent. However, to effectively manage the property as your landlord we will require you to confirm any arrangement you have at the property and provide a correspondence address so that communications regarding service charges, major works and housing management can be dealt with. We will also require sight of any tenancy agreement you have with your tenants to ensure they mirror the terms of your lease.
The lease may not allow subletting, 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 may give consent in exceptional circumstances.
The lease may state that the leaseholder is not allowed to sublet anything less than the whole of the flat, so you could not take a lodger or let a bedroom.
Example: ‘Not to assign underlet or part with possession of part only of the demised premises’
Or the lease may say that subletting is allowed only with consent from the landlord.
Example: ‘Not to underlet the demised premises without first obtaining the landlord’s consent in writing’. It is very important that you get this consent before subletting a property. 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 or using for Air B & B
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.
The landlord will have certain obligations under the lease, which they will perform subject to the lessee paying their rent, service charge and performing and observing their obligations. Common landlord obligations include:
Quiet enjoymentYour 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.
Leaseholders will typically be responsible for repairing the non-structural parts of their property. Landlords are generally responsible for repairing the structure, including the roof and exterior of the building, depending on the terms of the lease. In blocks of flats usually the landlord is responsible for maintaining and repairing the exterior and structure of the building. What is structural will depend on the nature of your building.
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.’
Although the landlord will be responsible for these repairs, the costs of completing this will be passed on to the leaseholder through the service charge.
In a block of flats, the landlord is usually responsible for insuring the building although this could be the responsibility of a Right To Manage Company 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 lease will almost always allow your landlord to recover a share of the cost from each of the leaseholders.This is buildings insurance only, you should make your own arrangements for contents insurance.
View insurance documnet
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.
Where can I go for advice?
In the first instance you should consult a solicitor if you have any specific questions regarding your lease.
You can contact your local Citizens Advice Bureau for independent advice.
The following websites also have useful information: