Over 56 plain-English definitions covering UK leasehold, US real estate, and the key terms you will encounter when extending a lease, buying a freehold, or navigating the 2026 reforms.
Showing 56 terms
A short-term rental agreement (typically 6–12 months) used for residential lettings in England and Wales. Completely different from a long leasehold — an AST is a tenancy, not an ownership interest. Often confused with leasehold by new buyers.
The Association of Leasehold Enfranchisement Practitioners. The professional body representing specialist leasehold solicitors and surveyors. When instructing a professional for a lease extension or freehold purchase, look for ALEP membership as a quality indicator.
A clause in a lease allowing either party to terminate the lease early, typically at set intervals. More common in commercial leases. In residential long leases, a break clause is unusual and potentially dangerous for leaseholders as it reduces security of tenure.
Legislation passed following the Grenfell Tower Inquiry that established new safety requirements for high-rise buildings and created protections for leaseholders against being charged for certain fire safety remediation works on qualifying buildings.
One of the three components of a lease extension premium. It represents the present value of the ground rent the freeholder will lose when it falls to peppercorn on extension. Calculated by dividing the annual ground rent by the deferment rate. Higher ground rent = higher capitalised ground rent component = higher total premium.
The statutory right for a group of leaseholders in a building to purchase the freehold collectively. Requires at least 50% of qualifying leaseholders to participate. The right is exercised by serving a Section 13 Initial Notice on the freeholder. See our full guide: Collective Enfranchisement Guide.
A form of property ownership introduced in England and Wales by the Commonhold and Leasehold Reform Act 2002, and proposed as the mandatory default for new-build flats under the 2026 Bill. Commonhold owners hold their flat outright with no lease, no freeholder, and no time limit. The building is managed collectively through a Commonhold Association. Equivalent to condominium ownership in the US.
The company through which commonhold unit owners collectively own and manage the shared parts of a commonhold building. All unit owners are members. Similar in function to a US Homeowners Association (HOA) or condominium association.
A US non-profit organisation that holds land in perpetuity to keep housing permanently affordable. CLT homebuyers own their home outright but lease the land from the CLT at a nominal annual fee, typically for 99 years with renewal rights. Structurally similar to UK leasehold but with a non-profit landowner rather than a for-profit freeholder.
The freeholder's formal response to a leaseholder's Section 42 notice (lease extension) or Section 13 notice (freehold purchase). Must be served within two months. The counter-notice can admit or dispute the leaseholder's right and will typically propose a higher premium than offered by the leaseholder.
A legal agreement between leaseholder and freeholder to change the terms of an existing lease without going through the statutory process. Commonly used to reduce an onerous ground rent, remove a problematic clause, or grant additional permissions. Requires both parties to agree — the freeholder cannot be compelled to enter one outside the statutory regime.
The discount rate used to calculate the present value of the freeholder's reversionary interest (the right to get the property back at lease expiry). Set at 5.0% for flats and 4.75% for houses following the landmark Sportelli case (2007). A higher deferment rate produces a lower reversion value and therefore a lower premium.
A provision in a lease that automatically doubles the ground rent at fixed intervals — typically every 10 or 25 years. A ground rent starting at £250/year doubling every 10 years reaches £8,000/year within 50 years. Many lenders refuse to lend against such properties. The proposed 2026 ground rent cap would override these clauses retrospectively.
The process by which leaseholders acquire greater property rights — either by extending their lease or by purchasing the freehold. Derives from the word 'franchise' (freedom). In UK law, enfranchisement rights are set out in the Leasehold Reform Act 1967 (houses) and the Leasehold Reform, Housing and Urban Development Act 1993 (flats). See: What is Leasehold Enfranchisement?
A charge levied by a private company to manage shared facilities on a freehold housing estate — roads, parks, play areas. Unlike service charges on leasehold flats, estate management charges have historically had less statutory regulation. Sometimes called 'fleecehold'. The 2024 Act introduced some protections; further regulation is proposed.
The standard form of property ownership in the United States — outright ownership of land and buildings with no time limit and no superior landlord. Equivalent to freehold in the UK. The term 'fee simple absolute' describes unconditional outright ownership. See: Leasehold vs Fee Simple: The UK/US Glossary.
The specialist administrative court that resolves disputes about lease extension premiums, service charges, freeholder qualifications, and Right to Manage applications. Applications cost £100–£300. The FTT sets lease extension premiums when leaseholder and freeholder cannot agree through negotiation. No order for costs is typically made — each party bears its own legal fees.
The freeholder's legal right to terminate (forfeit) a leaseholder's lease for breach of its terms, including non-payment of ground rent or service charges. Theoretically the freeholder could recover a property worth hundreds of thousands of pounds over an unpaid bill of a few hundred pounds. The Draft 2026 Bill proposes to abolish forfeiture. Currently subject to strict procedural requirements and court oversight.
Absolute ownership of land and buildings with no time limit and no superior landlord. The freeholder of a block of flats owns the land and building structure; the individual flat owners hold leaseholds. Equivalent to fee simple in the US. A freehold house owner (as opposed to a leasehold house) owns their home outright.
The owner of the freehold interest in a property — the land and building structure. In a block of flats, the freeholder is often a private company or landlord who charges ground rent and service charges to the leaseholders. Equivalent to the ground lessor in a US ground lease arrangement.
A lease under which the landowner leases bare land to a tenant who builds or occupies a structure on it. In the US, ground leases are primarily commercial (retail sites, office buildings, hotels). In the UK, the term 'leasehold' is used for the equivalent residential arrangement. See: Leasehold vs Fee Simple.
An annual fee paid by a leaseholder to the freeholder for the right to hold the lease. It provides the freeholder with income without any obligation to provide services in return. Banned at peppercorn on new leases since June 2022. The Draft 2026 Bill proposes to cap existing ground rent at £250/year in England. See: Ground Rent Cap £250.
The process of converting a stream of ground rent payments into a lump-sum present value for use in lease extension premium calculations. The annual ground rent is divided by the deferment rate to produce the capitalised value. Example: £500/year ground rent ÷ 5% deferment rate = £10,000 capitalised value.
A condominium in Hawaii where the owner holds the unit but leases the land from a private landowner or trust. Common in Waikiki and parts of Maui. Structurally identical to UK leasehold — same risks of ground rent resets, lease expiry, and financing restrictions. See: Hawaii Leasehold Condo Guide.
A US membership organisation that manages shared facilities in a residential development — maintenance, insurance, common areas. All homeowners in the development are members and pay regular HOA dues. Similar in function to a UK service charge arrangement, but with more democratic governance — HOA boards are typically elected by homeowner members.
The formal legal document (Section 13 notice under the 1993 Act) by which qualifying leaseholders begin the collective enfranchisement process — the purchase of the freehold. Once validly served, it locks in the valuation date and triggers a two-month response window for the freeholder. Not to be confused with the Section 42 notice which begins individual lease extension claims.
A legal agreement granting the right to occupy a property for a defined term. In UK residential leasehold, the original lease term is typically 99, 125, or 999 years. The remaining term is the unexpired lease length at any given date. The shorter the remaining term, the more expensive it becomes to extend the lease.
The statutory process by which a leaseholder adds years to their lease under the Leasehold Reform, Housing and Urban Development Act 1993. Currently adds 90 years (proposed to increase to 990 years under the 2026 Bill) and reduces ground rent to peppercorn. A premium is paid to the freeholder, calculated using RICS methodology. See: Free Lease Extension Calculator.
The owner of a leasehold interest — typically a flat owner in England and Wales. The leaseholder holds a time-limited right to occupy the property and pays ground rent and service charges to the freeholder. Has statutory rights to extend the lease and participate in collective freehold purchase.
A form of property ownership in which you own the right to occupy a property for a fixed number of years while a freeholder owns the underlying land. The most common form of flat ownership in England and Wales. Subject to ongoing reform. See: Leasehold vs Freehold: What's the Difference?
The monthly fee paid by manufactured (mobile) home owners to the park operator for the right to keep their home on a rented lot of land. Structurally equivalent to ground rent in UK leasehold — you own the structure but rent the land beneath it. Unlike UK leaseholders, manufactured home owners in most US states have very limited rights to resist rent increases.
A company appointed by the freeholder to manage a leasehold building on their behalf — collecting service charges, arranging maintenance, appointing contractors. Managing agents are not currently regulated by mandatory qualifications in England and Wales, though this is under review. Leaseholders can appoint their own managing agent by exercising the Right to Manage.
The additional premium payable when extending a lease with less than 80 years remaining. It represents 50% of the increase in combined value created by merging the leasehold and freehold interests through the extension. The 80-year threshold is a hard legal cliff — one day below it triggers marriage value; one day above it does not. The 2024 Act proposes to abolish it (not yet in force). See: Marriage Value Explained.
The person or company designated by the participating leaseholders to purchase the freehold on their behalf in a collective enfranchisement claim. Typically a residents' management company (RMC) in which all participating leaseholders hold shares. The nominee purchaser is the legal party who acquires and then holds the freehold title.
A token rent of nominal value — traditionally a single peppercorn — used in legal documents to satisfy the requirement for consideration in a lease without imposing any real financial obligation. Required on all new residential leases in England and Wales since June 2022. Ground rent is reduced to peppercorn when a lease is extended under the statutory regime.
The lump-sum payment made by a leaseholder to the freeholder in exchange for a lease extension or freehold purchase. Calculated using RICS methodology based on capitalised ground rent, reversionary value, and (where applicable) marriage value. Use our free calculator to estimate your premium.
The percentage ratio of a short leasehold property's value to its equivalent freehold value. Used in lease extension premium calculations. A flat with 70 years remaining might have a relativity of 95% — meaning it is worth 95% of what it would be worth with an indefinitely long lease. Lower relativity = greater marriage value when the lease is extended. Different RICS-approved relativity graphs exist and disputes between surveyors about which to apply are common.
Money accumulated by leaseholders through service charge contributions, held in a sinking fund for major future repairs. A well-funded reserve avoids large one-off special assessments (e.g. for roof replacement). Before buying a leasehold property, always check the reserve fund balance and any planned major works.
The freeholder's right to have the property revert to them when the lease expires. This future interest has a present value — even with 999 years remaining, it is worth something; with 60 years remaining, it is worth considerably more. The reversionary value is one of the three components of a lease extension premium.
The professional body that sets valuation methodology and professional standards for surveyors in the UK. RICS methodology is used in all statutory lease extension and freehold purchase valuations. RICS deferment rates (5.0% for flats, 4.75% for houses) are the standard benchmark set by the Sportelli case in 2007. LeaseVault's calculator uses RICS methodology.
The statutory right for leaseholders to take over management of their building without buying the freehold, under the Commonhold and Leasehold Reform Act 2002. Requires 50%+ of leaseholders to participate. Does not require proof of freeholder mismanagement. See: Right to Manage Guide.
The formal Initial Notice served on a freeholder to begin the collective enfranchisement (freehold purchase) process under the 1993 Act. Must be signed by not less than 50% of qualifying leaseholders. Once served, it fixes the valuation date and triggers a two-month response window.
The statutory requirement for freeholders to consult leaseholders before carrying out qualifying works costing more than £250 per leaseholder, or entering long-term service contracts. Without proper Section 20 consultation, the freeholder's ability to recover the cost through service charges is limited to £250 per leaseholder.
The section of the Landlord and Tenant Act 1985 giving leaseholders the right to apply to the First-tier Property Tribunal to challenge the reasonableness of service charges. One of the most commonly used leasehold rights. Can be used both to challenge historic charges and to obtain a determination on proposed future charges.
The formal Tenant's Notice served on the freeholder to claim a statutory lease extension under the 1993 Act. Fixes the valuation date, proposes a premium, and triggers a two-month response window. Must be served by a specialist solicitor — any error can invalidate the notice. See: Section 42 Notice Guide.
Amounts payable by leaseholders to the freeholder (or managing agent) to cover the cost of maintaining and managing the building and shared areas — cleaning, repairs, insurance, management fees, utilities for common parts. Unlike ground rent, service charges should reflect actual costs. Leaseholders have the right under Section 27A to challenge unreasonable service charges at the First-tier Property Tribunal.
When leaseholders in a building collectively own the freehold — typically through a company whose shares are held by the flat owners. A share of freehold eliminates the external freeholder, allows leaseholders to extend their own leases to 999 years for minimal cost, and gives control over building management. Generally the most desirable form of leasehold flat ownership. See: Share of Freehold Guide.
See Reserve Fund. Money accumulated from service charge contributions to fund major future repairs such as roof replacement, lift refurbishment, or external redecoration. A depleted sinking fund is a red flag when buying a leasehold property.
The landmark 2007 Lands Tribunal decision (Lands Tribunal, 2007, also confirmed in the Court of Appeal) that established the standard RICS deferment rates for lease extension calculations: 5.0% for flats and 4.75% for houses. These rates have been used in virtually all lease extension valuations since and are embedded in LeaseVault's calculator.
The UK equivalent of property transfer tax, payable by buyers on residential and commercial property transactions. Non-UK resident buyers pay a 2% surcharge on top of standard rates. Second home buyers pay a further 5% surcharge. On a £600,000 property, SDLT can exceed £60,000 for a non-resident purchaser.
See Section 42 Notice. The formal document served by a leaseholder to begin the statutory lease extension process. 'Tenant' in this context refers to the long leaseholder, not a short-term renter.
The highest grade of title registered at HM Land Registry, confirming that the owner has an unqualified right to the property. Most registered properties in England and Wales have title absolute. Equivalent to clear title in the US.
The number of years remaining on a lease at any given date. The most critical single number in leasehold property — it determines mortgage eligibility, resale value, the cost of extending, and whether marriage value applies. Below 80 years: marriage value triggered. Below 70 years: many lenders refuse to lend. Below 60 years: effectively unmortgageable.
Service charges that are not reasonable in amount or have not been incurred reasonably. Leaseholders have the right under Section 27A to apply to the First-tier Property Tribunal to determine whether service charges are reasonable. The tribunal can reduce or disallow charges it finds to be unreasonable.
The date at which a property's value is assessed for the purpose of calculating a lease extension premium or freehold purchase price. In statutory lease extensions, the valuation date is the date the Section 42 notice is served — not the date of completion. This means serving the notice early (with a longer lease remaining) fixes a more favourable valuation date.
A court order that transfers the freehold to leaseholders when the freeholder cannot be found or has failed to respond to a collective enfranchisement claim. The leaseholders pay the premium into court and the freehold is transferred to the nominee purchaser by court order.
Now you know the terminology — use our free calculator to estimate your extension premium using RICS methodology.
Calculate My Premium →Be the first to know when the Bill becomes law, new rates are confirmed, and key provisions come into force.