The leaseholders being charged thousands in fees: We investigate their plight and what can be done

Lily Canter
23 December 2019

The laws surrounding leasehold property are antiquated and complex. We investigate the key financial issues facing leaseholders and find out what can be done to fight back when costs escalate


Around a fifth of all dwellings in England are leasehold properties, made up of 2.9 million flats and 1.4 million houses.

Around one quarter (24%) of residential property transactions in England and Wales were leasehold in 2018 (230,000 transactions).

But while most leasehold owners do not face difficulties with their freeholder, when they do the costs can be dear.

The laws governing the relationship between leaseholders and freeholders are composed of multiple housing acts, which have been amended time and again.

Campaigners believe the rules are now weighted in favour of freeholders and that greater protection is needed for leaseholders.

Leaseholders in some instances are incurring fees and charges from their freeholders so high they are crippling their finances and making it impossible to sell their homes.

Leasehold reform campaigner Louie Burns says the law currently favours freeholders who have the ability to “extort money left, right and centre”.

“You have more legal protection in this country if you buy a £10 kettle from Argos than if you buy a multimillion-pound home,” he adds.

Campaigners argue that since housing laws were introduced to support aristocratic landowners, they are not fit for purpose in the 21st century. And the growth of freehold purchase and property management as a profitable industry means leaseholders are being treated as consumers rather than tenants.

While England and Wales share the same leasehold law, in Scotland and Northern Ireland the law has been updated.

Service charges and insurance

While leasehold homeowners own and are responsible for their own property, the communal areas are maintained by a third party. In the past, councils would have taken responsibility for or employed a company to oversee these areas, including streets and open spaces. But, recently, some developers have held on to this role and contracted a management company to operate the site.

Where a good management company is put in place, this needn't be problematic. However, the Housing, Communities and Local Government Commons Select Committee has already raised concerns over reports of leaseholders being “overcharged, paying for services they are not receiving, and high commission fees for freeholders and managing agents”.

It is not uncommon for freeholders to take a commission on leasehold flats of between 40% and 60% for arranging buildings insurance, according to Wade Barker, a specialist consultant at Bamptons Management, which manages properties on behalf of leaseholders.

Barker says: “In a recent case, a freeholder was charging £8,000 a year for building insurance. We got it down to £3,000, which shows how high its commission was.”

Leaseholders also have to split the cost of any major building costs. While this work may be essential, individuals may not have a say on when or how the work is carried out, which can leave them with costly bills whether or not they can afford them.

“My freeholder has disappeared and there is nothing I can do”


Clinical Psychologist Ilona Singer has spent thousands of pounds maintaining the building she lives in, despite not owning the freehold.

She bought the three-bedroom flat in Manchester 12 years ago and quickly realised that it was not being maintained.

“I didn’t pay the maintenance fees because no maintenance was being done. I wrote to the freeholder and said I was happy to pay the fees if they did some maintenance but they never responded.”

She has spent £3,000 fixing the roof and thousands more on other jobs that are not her responsibility.

“It’s a rare month when I don’t have something broken on the property,” she says.

The company which owned the original freehold was dissolved several years ago and yet Ilona cannot dissolve the arrangement.

She has sought legal advice several times and been told her only course of action is to sue the freeholder for breach of contract.

“I’m not entitled to legal aid and it would cost me £5,000 to £10,000 to sue the freeholder. Even if I won they could ignore me and I would have to go back to court. I’m a single mum and I just can’t afford this.”

Doubling ground rent

Many leasehold properties have a ground rent, which is a fee set by the freeholder that is meant to reflect the value of occupying the land. In the past, it was set at zero or a nominal fee and was largely used for flats.

More recently, clauses have been added to leases that allow the freeholder to review ground rent periodically, for example, every five, 10 or 25 years. Typically, the clause allows the freeholder to increase the rent – in some cases by 100%.

Ground rent rises do not have to reflect a commensurate – or indeed any – increase in the level of maintenance or quality or service provided to leaseholders, which has been recognised by the housing select committee.

The government has said that it will introduce legislation to ban new-build leaseholds and force freeholders to reduce ground rent to zero but it is not clear when this will happen. As a result, some developers such as Taylor Wimpey, have stopped building houses on a leasehold basis.

Permission fees

Permission fees are charged to owners of new-builds who want to make changes to their property. This could be as much as £2,500 for an extension. Fees could also be charged for remortgaging, erecting fences and painting doors.

In 2018, a Which? report found that some leaseholders were being charged £252 to own a pet and £60 to fit a doorbell, on top of a fee of up to £108 to file a request for the changes.

“Developers have switched from leasehold to ‘fleecehold’. They have removed the ground rent requirement but all the fee-paying covenants are still there which is what we were originally concerned about,” says Cath Williams, co-founder of the National Leasehold Campaign.

Buying the freehold

Leaseholders have a legal right to buy the freehold after two years of ownership. However, when they come to buy they may find the original price they were quoted has been doubled or even tripled. This is because in some cases the freehold has been sold on to an investment company, which then sets its own fees.

Leaseholders will often have to negotiate a fair price, taking time and incurring additional legal fees. When leaseholders enfranchise (purchase the freehold), they need to watch out that permission fees are removed from their titles as part of the negotiations as this not necessarily automatically happen.

“I was so incensed, I created a social business to work for leaseholders”

When Linz Darlington began researching enfranchisement for his London flat he discovered there was a whole industry around the process but none of it was impartial.


“What is truly outrageous is that most enfranchisement advisers are quite happy to work for a leaseholder or a freeholder – how can they negotiate firmly for the leaseholder if they receive repeat business from the freeholder?”

Mr Darlington, who lives with his wife Laura, bought the property knowing he would have to extend the lease because it only had 71 years left. His neighbour also wanted to extend their lease so the pair decided to opt for collective enfranchisement so they could jointly own the freehold.

“Our freeholder was a phantom menace. They gave absolutely no benefit to us but charged us for things like remortgaging. We had a self-maintaining lease, so we were responsible for doing anything like painting the outside of the house or roof repairs” says Mr Darlington who runs social enterprise Benefacto.

The process of enfranchisement took more than a year and cost Mr Darlington £27,500 for the lease extension, share of the freehold and legal costs - including £1,440 for the freeholder’s valuation fees. The two flat owners also had to set up a company in order to jointly own the freehold.

Once the process was complete, they were able to get their own buildings insurance which was £700 cheaper than the original freeholder had been charging them. This was due to the large commission the freeholder was taking.

“I was so incensed by the process, I created a project management company, Homehold, to support leaseholders.  By only working for leaseholders we can fight for the lowest premiums, and by proactively communicating to our clients we hope to take the stress out of the process too."

Extending leases

Leases for houses tend to be 999 years but are usually shorter for flats, sometimes just 120 years. Leaseholders need to renew or extend well ahead of their lease expiring. Technically, if they don't, the freeholder can take possession of the property at this point.

Williams says extending can be preferable to renewing. The price of extending or renewing can be considerable. This is because a renewal is likely to come with new terms attached and increased ground rent. It is far better to negotiate a lease extension with ground rent reduced to zero, although leaseholders still need to watch out for any permission fees that may remain.

But Stephanie Kleyman, consultant at Express Conveyancing, says extending a lease is an expensive process without a lot of alternatives.

“You have to negotiate with the freeholder or go to tribunal which is lengthy, time consuming and expensive. The freeholder holds all the cards.”

How can leaseholder control costs?

In the UK, the Commonhold and Leasehold Reform Act 2002 provides a right for flat leaseholders to take over the management of their building by setting up a special Right to Manage company. A range of conditions must be met to qualify for Right to Manage and at least 50% of leaseholders in the block must be willing to become members. There is no Right to Manage for houses.

If leaseholders want to challenge charges or other leasehold management issues, they can take the freeholder to a first-tier tribunal.

If leaseholders lose their case they can appeal to a higher tribunal at an additional cost, but even if they win it is legal for the freeholder to offset their costs by raising the leaseholder’s management fees.

What is changing?

The government has run several consultations on leasehold, and the housing select committee has urged the government to ensure commonhold becomes the primary means of ownership of flats in England and Wales, as it is in many other countries. It also recommended the government prohibits use of financial incentives to persuade customers to use particular solicitors.

The Competition and Markets Authority also launched an investigation in June 2019 to examine whether consumers had been mis-sold leasehold properties and are being given unfair contract terms.

Meanwhile, the Law Commission has conducted its own consultation on enfranchisement, which gives leaseholders the right to extend their lease, acquire the freehold of their house or collectively acquire the freehold of their block of flats.

However, uncertainty surrounding Brexit, and the revolving door of housing ministers, is hampering progress, says Williams.

In the meantime, leaseholders, or those thinking of buying a leasehold property, need to educate themselves and seek advice from a specialist agent who only works with leaseholders.

“More needs to be done to educate people about what it is to be a leaseholder. I don’t think people have enough information about what the risks are,” adds Kleyman. 

“Buying this house was the worst decision of my life”


Excessive permission fees and rising freehold purchase costs have left Ian Rice caught in a “leasehold trap”.

The builder bought his new-build house in Liverpool two years ago.

“It was the worst decision of my life,” he says. “I have to pay £50 to find out that the permission fee to paint my front door is £90 or that there is a £2,000 permission fee to build a conservatory.”

Ian says it will now cost him £20,000 to buy the freehold and pay legal fees to escape all the restrictions on his £270,000 home.

“When we initially bought the house, we were told the freehold would be £7,500 and we had the finances in place for this. Three weeks before I was about to buy the freehold, I received a letter from an offshore company saying they owned the freehold. I had to pay £50 for them to issue a freehold purchase price, which was £15,900 – plus their fees.”

Ian, who lives in the house with his wife and daughter, says the stress is affecting his health.

“I will have to remortgage and use my life savings to buy the freehold now. I feel so stupid but I know I’ve been duped. I thought the issue would be shoddy work, which I I could sort, but not this.”


National Leasehold Campaign:

Leasehold Knowledge Partnership:

Leasehold Solutions:


Are you a leaseholder or freeholder and have you been affected by these issues?

We'd love to hear your views and experiences.


First published on 15 January 2020

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