What to Look Out for in Lease Agreements as a First-Time Buyer [2025 UK Guide]

Why Lease Agreements Matter More Than You Think

For many first-time buyers in the UK especially in cities where flats are common purchasing a leasehold property is the most affordable way onto the housing ladder. But here’s the catch: when you buy leasehold you’re not buying the land itself—you’re buying the right to live in the property for a set number of years under a lease agreement.

That lease agreement is a legally binding contract that will shape your financial responsibilities rights and even resale value. Fail to read it carefully and you could end up with hidden costs or restrictions you never expected.

This guide breaks down exactly what to look out for in lease agreements as a first-time buyer the potential red flags and how to protect yourself before committing.

1. Lease Length – The Clock Is Always Ticking

The number of years left on the lease is crucial.

• Standard good lease length: 125–999 years (most modern leases).

• Warning zone: Under 80 years. Mortgage lenders become reluctant and extending the lease can be expensive.

• Critical: Below 70 years. The cost of extension skyrockets and the property value drops significantly.

Tip: Always ask your solicitor how many years are left and factor lease extension costs into negotiations if it’s short.

2. Ground Rent Clauses – Avoid Escalating Costs

Ground rent is the annual fee you pay to the freeholder.

Things to check:

• Fixed vs Escalating Rent – Some older leases double every 10–25 years making them unaffordable.

• Peppercorn Rent – Many new builds now include “peppercorn” (effectively zero) rent due to reforms.

• Government Changes 2025: New leasehold reforms continue to phase out unfair ground rents on most new leases.

Red Flag: If ground rent doubles or increases with inflation it could make your flat hard to sell.

3. Service Charges and Maintenance Costs

Service charges cover building maintenance cleaning insurance and repairs.

• Range: £1 000–£4 000 per year (can be much higher in London or for luxury developments).

• Check for:

  • How service charges are calculated

  • Reserve (sinking) funds for major repairs

  • Any upcoming planned works (roof lifts cladding replacement)

Tip: Ask to see the last three years’ service charge accounts to understand the trend.

4. Repair Responsibilities – Know Who Pays

The lease should outline whether the freeholder or leaseholder is responsible for:

• Structural repairs (roof walls)

• Common areas (hallways gardens lifts)

• Internal repairs (usually your responsibility)

If the building needs major works your share can run into thousands of pounds .

5. Restrictions on Use and Alterations

Leases often include restrictive covenants. Check for:

• Permission needed for structural changes extensions or even internal alterations.

• Restrictions on subletting running a business from home or keeping pets.

• Car parking rights (allocated first-come or none).

Red Flag: Leases with overly strict conditions can limit how you use your home—or reduce resale appeal.

6. Insurance Obligations

Usually the freeholder arranges buildings insurance and passes the cost to leaseholders via service charges.

• Confirm what’s covered.

• Ensure contents insurance is your responsibility.

7. Forfeiture Clauses – Extreme but Important

Some leases include clauses allowing the freeholder to repossess the property if you fail to pay ground rent or service charges. While rarely enforced they’re a reminder of the leaseholder’s obligations.

8. Dispute Resolution and Freeholder Rights

Check if the lease sets out:

• How disputes are handled (tribunal arbitration etc.).

• Freeholder rights to enter the property for inspections or repairs.

9. Selling or Extending Your Lease

• Assigning the Lease: Ensure no unfair restrictions or excessive admin fees when you sell.

• Lease Extension: Typically you can extend after 2 years but reforms are making it easier (90 years added with ground rent reduced to zero).

10. Your Solicitor’s Role

As a first-time buyer rely heavily on your solicitor to:

• Review the lease in detail

• Flag unusual or onerous terms

• Negotiate with the seller if lease conditions are unfavourable

WiseNest Tip: Always ask your solicitor for a plain-English summary of the lease.

Final Thoughts: Should First-Time Buyers Worry About Lease Agreements?

Lease agreements aren’t always bad—but they must be read carefully. A “good” lease should be:

• Long (ideally 125+ years left)

• With minimal or fixed ground rent

• Transparent on service charges and responsibilities

• Flexible enough not to restrict normal living

For first-time buyers the golden rule is: never ignore the small print—your future finances depend on it.