Introduction.
Most London flats are leasehold. What you are buying is a long right to live there, set out in a lease, and lenders read that lease closely.
A flat can be perfectly priced and beautifully presented and still be difficult to mortgage. The usual causes are a short lease, an onerous ground rent, unresolved building safety issues or an unusual building.
None of these is necessarily a deal-breaker. Many can be fixed, priced in or handled by choosing the right lender. But they need to be spotted early, ideally before you make an offer.
This guide explains what lenders look for in a lease and a building, how lease extensions work, and the questions worth asking before you commit.
The point below which extending a lease has traditionally become noticeably more expensive.
01Why lease length matters.
A lease runs down every year. As it gets shorter, the flat becomes harder to mortgage and more expensive to extend.
| Years remaining | What it usually means |
|---|---|
| 125 or more | No concerns for lenders |
| 90 to 125 | Generally fine for most lenders |
| 80 to 90 | Fine, but worth planning an extension |
| Below 80 | Extension costs rise; some lenders become cautious |
| Below 70 | Many lenders will not lend without an extension |
Indicative only. Lenders also set a minimum term left at the end of the mortgage.
The lender’s calculation
Lenders usually want a set number of years left on the lease when your mortgage ends, as well as at the start. A 25-year mortgage on a flat with 90 years left leaves 65 years at the end, which some lenders will not accept.
Adviser’s note
Ask for the exact lease length before you offer. Agents often quote “long lease” without the number.
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- 02Extending the lease
- 03Ground rent and service charges
- 04Cladding and building safety
- 05Flats lenders are cautious about
- 06Questions to ask before you offer
- 07A short lease, illustrated
- 08Checklist and glossary
02Extending the lease.
You can usually extend your lease by law once you qualify, or agree terms informally with the freeholder.
- The statutory route. Adds 90 years to the lease and reduces ground rent to zero, with the price set by a formula.
- An informal deal. Can be quicker but may come with less favourable terms. Have it checked carefully.
- Buying with an extension underway. A seller can start the process and pass it to you on completion.
- Costs. The premium, plus the freeholder’s reasonable legal and valuation fees and your own.
Changing rules
The Leasehold and Freehold Reform Act 2024 is changing how extensions work, including longer extensions and how the price is calculated. Parts are still being brought into force, so your solicitor should confirm the current position.
Added to the lease under the statutory extension process in England and Wales.
03Ground rent and service charges.
Ongoing costs under the lease affect both your budget and whether a lender will accept the flat.
| Charge | What to check |
|---|---|
| Ground rent | The amount, and whether and how it rises |
| Doubling ground rent | Rents that double often can concern lenders |
| Service charge | The current amount and the last three years’ accounts |
| Reserve fund | Whether money is being set aside for future works |
| Major works | Any planned roof, lift or façade projects |
New leases
Most new long residential leases in England and Wales granted since June 2022 must have a ground rent of zero.
Budgeting
Lenders include service charges and ground rent in affordability checks, so a high service charge reduces what you can borrow.
04Cladding and building safety.
Since the Grenfell fire, lenders look closely at the external walls of blocks of flats. Most flats are unaffected, but the checks are now routine.
- EWS1 forms. A fire safety assessment of a building’s external walls, requested by some lenders for certain blocks.
- Building height. Taller buildings, typically 11 metres or five storeys and above, face the closest checks.
- Leaseholder protections. The Building Safety Act 2022 protects many leaseholders from remediation costs.
- Leaseholder deed of certificate. A form confirming whether a flat qualifies for those protections.
Ask early
Ask the agent whether the building has an EWS1 form, remediation plans or a building safety certificate before you offer. It can take weeks to obtain.
If remediation is under way and funded, many lenders will still lend. We know which ones.
05Flats lenders are cautious about.
Some flats suit only a smaller group of lenders. Knowing this before you offer avoids a failed valuation.
| Type of flat | Typical lender view |
|---|---|
| Ex-local authority | Accepted, sometimes with conditions on height or construction |
| High floors without a lift | Some lenders are cautious |
| Deck or balcony access | A smaller group of lenders |
| Above a shop or restaurant | Depends on the business below |
| Studio flats | Minimum floor area rules apply with some lenders |
| Non-standard construction | Specialist lenders only, in some cases |
Indicative only. Criteria vary by lender.
Share of freehold
With a share of freehold, the flat owners jointly own the freehold. Lenders still treat it as leasehold and still read the lease, so lease length remains important.
06Questions to ask before you offer.
These questions take a few minutes and can save weeks later.
Lease length
Exactly how many years are left?
Ask for the numberGround rent
How much, and does it increase?
Check the review termsService charge
What is it, and what does it cover?
Ask for accountsMajor works
Are any planned or already billed?
Check the minutesBuilding safety
Is there an EWS1 form or remediation plan?
Ask the agentRestrictions
Are there rules on pets, letting or alterations?
Read the leaseAdviser’s note
Send us the lease length and building details as soon as you find a flat. We will confirm which lenders are comfortable with it before you spend money on surveys.
07A short lease, illustrated.
A couple buying a Zone 2 mansion block flat
An attractive two-bedroom flat at £625,000, with 78 years remaining on the lease.
- Issue
- Below 80 years, so extension costs were rising and some lenders were cautious
- Approach
- The seller served the statutory notice and assigned it to the buyers on completion
- Price
- Reduced to reflect the cost of extending
- Lender
- Chosen for its comfort with the current lease length
- Outcome
- Completed on time, with the lease extension following under the existing notice
This example is illustrative and does not describe a real client.
08Checklist and glossary.
Information to gather
- The exact lease length
- Ground rent amount and review terms
- Service charge accounts for three years
- Details of any major works
- EWS1 form or building safety information, if needed
- Management pack from the managing agent
- Lease restrictions on letting, pets or alterations
- Your own ID, income and deposit evidence
Glossary
- Leasehold
- Ownership for a fixed term under a lease.
- Freeholder
- The owner of the building and land.
- Ground rent
- An annual payment to the freeholder.
- Service charge
- Your share of the building’s running costs.
- Share of freehold
- Flat owners jointly owning the freehold.
- EWS1
- A form assessing the fire safety of external walls.
- Section 20
- The consultation process for major works.
- Premium
- The price paid to extend a lease.
Related: First-time buyer advice · First-Time Buyers Guide · All guides