A Guide To Leaseholder Rights and Obligations

Leaseholders have a bunch of rights and responsibilities when it comes to their leasehold property. These are set out in the lease agreement and by law – and they can make a real difference to how you enjoy your home and deal with the issues that come up. Here’s the lowdown on the key rights and obligations that you should know about.

What are Leaseholder Rights and Obligations?

When someone has a lease to live in a property owned by someone else (the freeholder or landlord), that’s a leasehold. Both the rights and responsibilities of a leaseholder are set out in the lease agreement, local laws and government rules about leasehold property.

Leaseholder rights are the bits in the lease that are in your favour, basically granting you certain entitlements. Leaseholder obligations, on the other hand, are the things that you agree to do under the lease agreement – and they’re just as important.

7 Key Leaseholder Rights To Get Your Head Around

The Right to Quiet Enjoyment

You’ve got the right to be left alone in your home. This is also known as the “Covenant of Quiet Enjoyment” and means that your landlord (or people they send round) shouldn’t be causing you any hassle or stress. This right exists even if you don’t have a written agreement or if your fixed-term tenancy has ended.

Your landlord will be breaking your right to peace and quiet if they invent reasons to come to your home, visit loads without notice or permission, refuse to do any repairs or safety checks, or mess with your utilities.

The Right to Extend Your Lease

If you’ve owned a flat for two years or more, you can extend the lease – if you qualify. This is thanks to the Leasehold Reform Housing and Urban Development Act of 1993. The right is to add 90 years to the existing lease length – so if your original lease had 70 years left, the new one would be good for 160 years. And the best bit? You won’t have to pay any extra rent – just a nominal peppercorn rent.

There are a few conditions to qualify for an extension, though. Your original lease had to have been at least 21 years when you first signed it, for a start.

The Right To Manage

If you’re a leaseholder (flat owner), you have the right to take control of your building’s maintenance and decide how any money you pay in service charges is spent. This is called the Right To Manage, and it was introduced by the Commonhold and Leasehold Reform Act of 2002. You don’t need the landlord’s permission to do this – as long as you’ve got enough other leaseholders on board and you meet the eligibility criteria.

The Right to Buy the Freehold

If you and your fellow leaseholders join forces, you can actually buy the freehold of the building – a process known as collective enfranchisement. This is set out in the Leasehold Reform Housing and Urban Development Act 1993. There are a few conditions you need to meet, such as having a minimum number of participating leaseholders.

Buying the freehold gives you much more control over your property and can even boost its value.

The Right to Challenge Service Charges

Leaseholders can challenge service charges they think are unfair or excessive. If you think a charge is dodgy, you can take it to the First-tier Tribunal (Property Chamber) in England or the Leasehold Valuation Tribunal in Wales to get it sorted out.

The Right to Be Told About Major Works

Your landlord has to tell you about any major works or long-term agreements they plan to do that will cost you over a certain amount in service charges. This is all down to Section 20 of the Landlord and Tenant Act 1985 – and it’s all about treating you fairly and keeping you in the loop.

If your landlord doesn’t do this, you might be able to get out of paying for the whole project. This is all about making sure you’re not getting ripped off.

The Right to a Fair Lease

Leaseholders have the right to a fair and transparent lease agreement. This means that the terms of the lease can’t be unfair or misleading, and anything that looks dodgy can be challenged under the Consumer Rights Act 2015.

You can also ask to change the lease if its terms are causing you a lot of trouble or are just plain outdated.

6 Key Leaseholder Obligations That Are Worth Knowing

Keep Your Place Clean and Tidy

You’re generally responsible for keeping your home and garden in good nick.

You Need to Pay Your Service Charges On Time

This might seem obvious, but you really need to pay your service charges when they’re due. Otherwise you might get charged extra fees for late payment.

Make Sure You Stick to Your Lease Terms

You should make sure you understand what’s agreed in the lease and stick to it. This includes things like not subletting your home without permission or running a business from it.

Deal With Disputes Properly

Disagreements can happen, but you should always try to sort them out fairly and through the proper channels.

Paying Ground Rent: Ground Rent in a Nutshell

Ground rent is a regular payment made by the people who own leasehold homes – like you – to the person who owns the land the property’s built on – the freeholder. It’s commonly found in long-term leases and is controlled by several pieces of legislation, including the Ground Rent Act 2022. The amount of ground rent is spelled out in the lease itself, and can change over time.

Letting the Freeholder In

As a leaseholder, you have an obligation to let the freeholder into your property for inspections, repairs, or maintenance. The lease will usually tell you when this can happen, and – by law – the freeholder has to give you some notice first, normally 24 to 48 hours. If it’s an emergency situation, then this notice period might be cut down.

What to Do When Leaseholder and Freeholder Disputes Arise

Mediation – Getting It Sorted Without Going to Court

When disagreements pop up between leaseholders and freeholders, trying mediation or alternative dispute resolution can be a great way to sort things out. This involves having a neutral third person who can help you and your freeholder have a constructive chat and hopefully find a resolution that works for everyone without having to resort to going to court.

Mediation can be particularly attractive because it:

• Saves cash: Mediation and ADR tend to be a lot cheaper than going through the courts.
• Saves time: Disputes get sorted out a lot faster than taking a case to court.
• Preserves your relationship: Going through mediation can help you and your freeholder have a better relationship, which is useful when you’re going to need to interact with each other in the future.

Going to Court – What’s Involved

If mediation or ADR doesn’t work out, and you still can’t sort things out with your freeholder, then taking the issue to court might be the next step. You can get some independent advice and go all the way to a tribunal or court to sort things out.

Things might get kicked to the First-Tier Tribunal (Property Chamber) if it’s a straightforward dispute, like arguing about service charges or breach of lease. More complicated cases might be sent to a County Court.

Becoming the Freeholder – A Much Better Option?

Another option, which can really sort out leaseholder and freeholder disputes, is to buy the freehold of the building. This means you and any fellow leaseholders who take part in the purchase get to own the property and control it, making it much easier to make decisions about what happens next.

To do this, you’ll need to meet certain criteria – you’ll need to have the backing of at least 50% of the leaseholders in the building, and the building cannot be more than 25% non-residential, for example. You’ll also need to have long-term leases of 21 years or more when they were first granted.

The benefits of becoming a freeholder are many:

• Having control over the property and its management: You can either take charge of looking after the property yourself or hire a managing agent of your choice, which makes things a lot clearer and more efficient.
• Reducing the risk of disputes: You don’t have to worry about disagreements with an external freeholder any more.
• Increasing your property value: If you own the freehold, your property tends to be worth more, which makes it a very attractive financial option.

Final Thoughts

It’s super important to know your rights and responsibilities as a leaseholder, as this can really help you navigate your relationship with your landlord. While leaseholder rights give you protection and control, your obligations are there to ensure your home is looked after and that you’re following the rules of the lease.

If you do get into a dispute with your landlord or run into difficulties, purchasing your freehold can be a game-changer. Not only do you get rid of ground rent, you also get to take control, make your own decisions and have peace of mind.

Ready to take the next step? Learn more about buying your freehold or contact us for expert advice. Empower yourself and your property today.