If you own your property pursuant to the leasehold regime, then your lease is commonly regarded as a depreciating asset.

The amount of time left on the lease is a factor which dictates the amount a leaseholder must pay by way of a premium to the landlord to extend it. The premium can be expensive, especially when factoring in legal fees and costs of an expert to determine a suitable sum, in the event of a dispute. It is also hard to predict what amount an expert will determine as a suitable sum for the premium.

Modern residential leases usually contain a clause which prohibits the occupants from carrying out illegal activities within a property. These clauses can be coupled together with a clause which prevents the occupants from creating a nuisance that interferes with their neighbours’ enjoyment of their properties.

In March 2020, emergency legislation helped to assist with the Covid-19 Pandemic situation that faced many of those in rented accommodation. However, no such assistance was given to leaseholders to assist with payment of their service charges, ground rent or payments arising from their leases. Many homeowners have found difficulties, and are likely to still face further difficulties in complying with their leasehold obligations as set out in their leases. In the absence of any legislative changes or concessions, many homeowners are worried about losing their home or investment property.

In a move welcomed by leasehold campaign groups, the Competition & Markets Authority (CMA) is investigating four of the UK’s largest household builders about how leaseholds are being sold. Buyers have complained about being caught in a leasehold trap, with rising ground rents and unfair fees. In September 2020, the CMA requested information from the developers. The CMA has made clear that any findings of mis-selling or unfair contract terms won’t be tolerated.

Residential leases often contain clauses which require tenants not to do something to their property. Such restrictions may include not altering the property, not subletting or keeping carpets on the floor. These restrictions are known as covenants and can sometimes be deemed to be absolute i.e. there is no caveat in the clause which allows for a reasonable request to be considered by the landlord. Without the landlord’s confirmation that these clauses have been relaxed, a tenant would need to strictly obey an absolute covenant. If a covenant is relaxed, then this may be recorded in the form of a licence.