A guide to understanding your lease

All leases have their unique characteristics and, as the First Tier Tribunal often proves, can be interpreted in different ways. The scope of this document is to explain to the reader the core structure of leases. By understanding this, a potential purchaser or owner of a leasehold property can be armed with sufficient knowledge to have a sensible conversation about a specific lease.

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Parties to the lease

‘Parties’ to the lease means the people or companies involved in the contract. Your lease will usually show the names of the original parties to the lease on the first page. If you have bought the lease from someone else and are not the first leaseholder, it won’t be your name that appears in the lease. However, your solicitor will have registered you with the Land Registry as the lease owner.
Parties to the lease will ALWAYS include;

1. The Landowner (also may be referred to as “The Lessor” or the “Freeholder”)
2. The Leaseholder (also may be referred to as “The tenant” or “the lessee”)

Additional parties to a lease can include;

1. A ‘head leaseholder’ will be the leaseholder with the longest lease, who has leased your flat to you and who pays ground rent to the freeholder.
2. A Residents Management company which is a body created to carry out the day to day management functions of the whose membership and directors are made up of leaseholders
3. A managing agent. Quite often, a specific managing agent is named as a party. Be wary of such arrangements. It can be extremely difficult to replace such managing agents as it can require Deeds of release and novation to be agreed by ALL leaseholders in order to remove this covenant.

The property – Also known as “the Demise”

The description of the property will normally be described near the beginning of your lease or later on in a schedule. It may also refer to a plan. Example text you might see in your lease: ‘All that ground floor flat known or intended to be known as Top Floor Flat, 7 Draper Road, Oxford … edged red on the plan annexed hereto.’

It is very important to understand where the property/demise ends and the rest of the building starts. Common things to check;

– Who owns the loft space?
– Who owns the roof?
– Who is responsible for the window frames (often the leaseholder but the freeholder or RMC being made responsible for the paint)

Rights you are granted with the property

This usually refers to your rights relating to access over shared areas or other parts of the building. It may include rights of way. Rights granted to a leaseholder are also called easements in a lease. For example, you may need to walk down a path you don’t own and up a staircase you don’t own to get to your flat. It is clearly sometimes necessary for leaseholders to have rights over property they don’t own, otherwise they may find they are unable to access or use their own property. Your lease must provide you with a right of way for access.

Regulations that you have to adhere to

The regulations section usually contains the things you should and should not do when living in your flat. Some examples of common regulations are set out below.

Carpeting

There may be a requirement to keep the floors carpeted. This assists in noise reduction between flats. Even if this clause isn’t present you would be advised to get your landlord’s permission before carrying out any alterations (say to wooden flooring) . Specifically, you need to make sure this would not break any nuisance clause in the lease.

Pets

Your lease may restrict you from keeping pets or state that you need the landlord’s permission to do so. There are several common variations on this restriction. Some allow the landlord or residents management company to withdraw their permission if the pet causes a nuisance.

Example text you might see in your lease: ‘not to keep any bird, dog or other animal in the Demised Premises without the previous consent in writing of the Lessor… such consent to be revocable by notice in writing at any time on complaint of any nuisance or annoyance being caused to any owner tenant or occupier of any other flat in the building’.

Nuisance

Most leases have a clause relating to nuisance. This is to stop you from causing problems for other leaseholders in the building. Example text you might see in your lease: ‘not to use the Flat nor permit the same to be used for any purpose… other than as a private dwelling house in the occupation of one family only nor for any purpose from which a nuisance or annoyance can arise to the lessor or the owners lessees or occupiers of other flats in the building…nor for any illegal or immoral purpose’.

Lessee’s/Tenants/leaseholder’s obligations

These spell out what you are responsible for. Some examples of common obligations are set out below.

Payment of charges
Ground Rent- link
Event Fees- link
Administration charges – link

Alterations

There are three different ways that a lease may affect your right to make alterations.

1. The lease may not mention alterations, in which case you can make any alterations you like as long as they do not damage the building or reduce the value of the flat.
2. The lease may contain a clause which bans all alterations. It is important to know whether this ban applies to alterations in general or just structural alterations. For example, your lease may say, ‘not to carry out any structural alterations or make any structural additions’, which means you cannot carry out any structural alterations. However, if it says, ‘not to carry out any alterations or make any additions’, this is much more extensive and means your landlord can refuse permission for any alterations without giving any reason. They are also allowed to charge a fee for giving you permission.
3. The lease may state that you need the landlord’s permission before making any alterations. As in 2 above, this could apply to all alterations or just structural alterations. Example text you might see in your lease: ‘not to make any structural alterations or structural additions to the property or any part thereof without the previous consent in writing of the lessor’. If there is an RTM company, you would need to ask them for permission to make the alterations. If the parties to your lease are you, your landlord and a management company, you may need the management company’s permission to carry out alterations. It’s very important to know the difference between structural alterations and more general alterations. Structural alterations usually involve work to the load-bearing parts of the property, but can include non-load-bearing parts if the work would alter the essential appearance and shape of the property. Non-structural alterations are work to the fixtures and fittings in the property. If your lease does not completely ban all alterations, you will need your landlord’s permission, but your landlord is not allowed to refuse permission unreasonably if the alteration would improve the property. Your landlord may give you permission but set certain conditions that you must meet, for example, the need for a formal ‘licence’ to make alterations. Your landlord can charge a reasonable fee for giving you permission to cover their legal and valuation expenses.

Subletting

There are usually three different ways a lease may restrict your ability to sublet, or there may be no restrictions at all. (Please note that whatever your lease says about subletting, there may still be restrictions on the use of the flat.)
1. If the lease contains no restrictions on subletting, you can assume that you do not need permission to sublet.
2. The lease may ban subletting altogether. Example text you might see in your lease: ‘not to underlet the whole of or any part of the demised premises’. This usually applies to shared-ownership leases where you own less than a 100% share of the flat. Your landlord does not have to be reasonable when refusing permission. This means you will not be able to challenge them in a tribunal on this point. You will only be able to sublet if your landlord gives you permission.
3. The lease may ban subletting only part of the flat. Example text you might see in your lease: ‘not to assign, underlet or part with possession of part only of the demised premises’. If this restriction appears, you are not allowed to sublet anything less than the whole flat, for example, you cannot just let a bedroom.
4. The lease may contain a qualified restriction against subletting, which allows you to sublet the flat as long as you get your landlord’s permission first. Example text you might see in your lease: ‘not to underlet the demised premises without first obtaining the landlord’s consent in writing’. If there is an RTM company, you should ask them for permission. If your lease says that you need permission to sublet your flat, your landlord cannot unreasonably refuse permission. For example, it would be reasonable to refuse permission if you are a commercial tenant and are likely to break the terms of the lease. Your landlord may give you permission but set certain conditions that you must meet, such as applying to them for a licence to sublet. They can also charge a reasonable fee to cover their costs in relation to giving you permission to sublet.

Use of the flat

Whatever the lease says about subletting, there may still be restrictions on how you can use the flat.
Example text you might see in your lease: ‘not to use the demised premises other than as a private residence in the occupation of a single family only’.
Such a restriction would, for example, prevent you from subletting your flat to a group of unrelated students.
Most leases will also ban you from using the flat in a way that would cause a nuisance to or annoy other occupiers in the building.

Access

Your landlord will usually have the right to access your flat for certain purposes. Example text you might see in your lease: ‘the lessor and the lessor’s duly authorised Surveyors or Agents may with or without workmen upon giving forty-eight hours previous notice in writing enter the demised premises for the purpose of (x)’. Your landlord will usually have the right to access your flat to check the state of repair of the flat and to carry out repairs to other parts of the building. Your landlord has to be careful not to abuse this right, as you always have a right to live in the flat without lawful interference by your landlord. If there is a management company, the management company may have the right to enter your flat.

Landlord’s obligations

Your landlord will have certain obligations under the lease. Some examples of common landlord obligations are set out below.

Quiet enjoyment

Your landlord must respect your right to use (enjoy) the property without any disturbance from them or anyone who works for them. In practice, other obligations might come before this one in your lease, for example, your landlord may have to carry out repairs that may cause some disturbance to tenants.
Example text you might see in your lease: ‘the lessee paying the rents hereby reserved and performing and observing the several covenants on the lessee’s part and the conditions herein contained shall peaceably hold and enjoy the Flat during the said term without any interruption by the Lessor or any person rightfully claiming under or in trust for the lessor’.

Repairs and maintenance

Although you will usually be responsible for repairing the non-structural parts of your property, responsibility for repairing the structure (including the roof and outside of the building) depends on the terms of the lease. In blocks of flats, the landlord will usually be responsible for maintaining and repairing the outside and structure of the building.
This is not always the case. For example, in a house that has been converted into two flats, the leaseholders might be responsible for repairing and maintaining the structure. Or, the leaseholder in the lower flat might be responsible for repairing and maintaining both the inside and outside of the building up to the first-floor level, and the leaseholder of the upper flat is responsible for everything above the first-floor level. In those circumstances, the lease should state who is responsible for maintaining any shared parts and how the costs should be split between the leaseholders.
Example text you might see in your lease: ‘the lessor will maintain and keep in good and substantial repair and condition the main structure of the Building including the foundations and the roof thereof with its gutters and rainwater pipes’.
What is considered a structural repair will depend on your particular building.

Insurance

In a block of flats, the landlord is usually responsible for insuring the building (although this could be the responsibility of an RTM company or a management company if there is one).
Example text you might see in your lease: ‘the lessor will at all times during the said term insure and keep insured the building against loss or damage by fire or such other risks (if any) as the lessor shall think fit in some insurance office of repute’.
If your landlord is responsible for insuring the building, your lease will almost always allow them to recover a share of the cost from each of the leaseholders.
In some leases, usually where there are just two flats in the building, each leaseholder may be responsible for insuring part of the building themselves. This is most often the case where the lease is ‘self-repairing’ and the leaseholders own both the inside and outside of their own flat. If this is the case, you are likely to be responsible for the cost of insuring your part of the building yourself.
Another possibility, again usually where there are just two flats in the building, is that the leaseholders are responsible for insuring the whole building. If this applies, the cost of buildings insurance is usually shared between the leaseholders.

Management

Your lease will usually state who is responsible for managing the building. This will often be your landlord, but they may employ a managing agent.

Length of the lease

This will usually be shown on the first or second page of your lease. It is very important that you know how many years remain on the lease. If you are thinking of buying a property, it is important to know this from the start. The value of your property reduces as the term (number of years remaining) of the lease gets shorter. If the lease runs out, the flat becomes the property of the landlord. If your lease has less than 99 years remaining, you might think about extending the lease. This is particularly important if your lease has just over 80 years remaining, as it is much more expensive to extend a lease which has less than 80 years remaining. Get more information on lease extension, or use our lease extension calculator to get a rough idea of the cost of extending your lease. Example text you might see on your lease: ‘125 years commencing 1st May 2003’.