Leasehold Glossary

A

Acquisition Date

The date on which management of the building is transferred to the RTM company or when the freehold is transferred over to the new owners

Adverse Possession (Squatters’ Rights)

A legal principle that allows a person to claim ownership of land or property if they have occupied it without the owner’s permission for a specified period and meet certain legal conditions. 

Appurtenant Property

Additional property (e.g., garages, gardens) related to  a flat or house which may need to be considered in respect of the sale of a landlord’s interest or included in an enfranchisement claim.

Assignment

The legal transfer of a lease from one leaseholder (assignor) to another (assignee), usually requiring the landlord’s consent. Most commonly arising when a flat is sold.

 

B

Bona Vacantia

Property or assets that have no legal owner, often because a company owning property has been struck off by Companies House and cannot be reinstated, or the owner  of property has disappeared or died without heirs. The Crown may claim ownership in such cases and be willing to sell the property, particularly for the freehold reversion of leasehold properties.

 

Building Safety Act (BSA) 2022

Legislation aimed at improving building safety standards, particularly in light of the Grenfell Tower fire tragedy. It establishes a framework for ensuring that buildings are constructed, managed, and maintained to high safety standards, and introduces measures to address issues such as cladding and fire safety in residential buildings.

 

C

Capitalisation Rate

The rate used to value the income generated from ground rent payments.

Collective Claim

A claim made by multiple leaseholders together, often in an enfranchisement or RTM case.

Collective Purchase

The process by which a group of leaseholders jointly purchase the freehold of their building (also known as collective enfranchisement).

Completion

The final legal stage when property ownership or lease terms are formally completed.

Conveyancing

The legal process of transferring property ownership from one party to another.

Counter Notice

The landlord’s formal response to a lease extension, freehold purchase or RTM claim, stating whether the claim is accepted or disputed.

County Court

A court that deals with civil matters, including certain property disputes such as enforcement of lease terms, possession claims, and some enfranchisement-related issues.

D

Deed of Rectification

A legal document used to correct an error or omission in a lease or other legal document so that it accurately reflects the original intention of the parties.

Deed of Variation

A deed used to vary the terms of a lease.

Deferment Rate

The rate used to calculate the present value of a landlord’s reversionary interest in the property.

Defective Notice

A notice that does not meet the legal requirements and may invalidate a claim.

Development Value

The additional value associated with the potential for future development on the property. It commonly arises where flat owners collectively enfranchise and together may have the ability to develop or alter a building.

Disclaimer

This is most generally a statement avoiding liability, but in relation to this field is commonly used to refer to a power used by the Crown (in bona vacantia cases) to prevent the crown incurring obligations and liabilities which would otherwise pass to the Crown along with ownership of a property.

E

Enfranchisement

The legal process by which leaseholders collectively or individually acquire the freehold of their building or extend the terms of their lease. This is typically done to gain more control over the property, prevent the lease from expiring, and avoid high costs associated with short leases.

F

First-tier Tribunal (Property Chamber)

The tribunal that resolves disputes related to leasehold claims such as premiums, lease extensions, and RTM eligibility.

Formal Lease Extension (Statutory Lease Extension / Statutory Route)

A lease extension carried out under statutory rights (typically under the Leasehold Reform legislation), which provides a structured legal process, fixed rights, and prescribed valuation methods.

Fire Safety Order

A part of the Building Safety Act (BSA), requiring building owners and managers to ensure proper fire safety measures are in place, including risk assessments, emergency planning, and the installation and maintenance of fire safety equipment. This applies especially to high rise residential buildings.

Freehold

Ownership of land and buildings outright, with no time limit, subject to any applicable obligations, restrictions and any rights affecting the property.

Freeholder (Landlord)

The person or entity who owns the freehold (the land and building) and leases it to leaseholders.

Freehold Purchase

The process by which a leaseholder (individually or collectively) buys the freehold interest in a property.

Freehold Sale

The sale of the freehold interest by the landlord to another party, which may trigger leaseholders’ rights such as the right of first refusal.

G

Ground Rent

Annual payments made by the leaseholder to the freeholder under the terms of the lease.

 

I

Informal Lease Extension (Non-Statutory Route)

A lease extension negotiated outside the statutory framework (not governed by legislation), where terms are agreed directly between the leaseholder and landlord.

 

L

Landlord Certificate (BSA)

A certificate required by the BSA, confirming that the landlord/developer of a building has met certain safety obligations and stating who would be responsible in the event of remediation works. This is normally used in reply to a leaseholder certificate to show if the leaseholder qualifies for the relevant exceptions.

Lease

A legal agreement granting the right to occupy or use a property for a specified period in exchange for payment (e.g., rent or premium).

Lease Extension / Renew a Lease

The process of increasing the term of an existing lease, either informally or through statutory rights.

Lease Plan

A plan attached to a lease that shows the extent of the property being leased, often including boundaries, shared areas, and any appurtenant property.

Leaseholder (Lessee/Tenant)

A person who owns a leasehold interest in a property for a fixed term but does not own the freehold.

Leasehold Certificate (BSA)

A certificate to be sent to the landlord on sale of the leasehold property to state whether the leaseholder qualifies or does not qualify for leaseholder protections relating to remediation works.

Lessor (Landlord)

The person or entity who grants a lease to another party, or acquires the property interest of someone who has granted a lease. 

Licence

Formal permission granted by a landlord to a leaseholder to carry out a specific action, such as alterations, assignment, or subletting.

Licence to Assign

A licence granted by the landlord allowing a leaseholder to transfer (assign/sell) their lease to another party.

Licence to Sublet / Underlet

A licence granted by the landlord permitting the leaseholder to sublet part or all of the property.

Long Lease

A lease originally granted for a long term (typically more than 21 years), commonly used in residential leasehold ownership.

M

Managing Agent

A professional management company appointed to handle the day-to-day management of the property on behalf of the landlord or RTM company.

Marriage Value

The additional value that can be gained from extending a short lease (under 80 years), half of which is typically payable to the landlord.

Missing Freeholder (Lost/Absent Freeholder)

A situation where the freeholder cannot be located, often requiring legal procedures (such as application to court) to proceed with lease extensions or enfranchisement.

N

Non-Participating Tenant

A leaseholder who chooses not to participate in an enfranchisement or RTM claim.

Nomination Notice

A formal notice from leaseholders to the landlord indicating their intention to purchase the freehold.

Nominee Purchaser

The person or entity chosen by leaseholders to act on their behalf in acquiring the freehold.

P

Participating Tenant

A leaseholder who participates in a collective enfranchisement or RTM claim.

Peppercorn Ground Rent

A nominal ground rent.

Premium

The price paid to the landlord for a lease extension or the purchase of the freehold.

A method of selling property where the sale price is agreed through private negotiation between buyer and seller, rather than by auction.

Private Treaty

A method of selling property where the sale price is agreed through private negotiation between buyer and seller, rather than by auction.

Protected Interest

An interest in the property that triggers the need to serve a Section 5 notice offering leaseholders the right of first refusal.

Q

Qualification Criteria

The specific requirements that leaseholders must meet in order to exercise their rights (e.g., lease length, building type, etc.).

R

Rent charge

A regular payment charged on freehold land, payable to a third party who has no other legal interest in the property.

Reversion

The landlord’s right to regain possession of the property once the lease term expires.

Right of First Refusal

Leaseholders’ rights under the Landlord and Tenant Act 1987 to acquire ownership of their landlord’s interests in the property before they can be given or sold to a third party, on the same (or better) terms that are offered to that third party.

Right to Manage (RTM)

The legal right that allows leaseholders to take over the management of their building, without buying the freehold.

S

Section 42 Notice

A formal notice served by a leaseholder to begin the statutory process of extending their lease.

Section 5 Notice

A notice served under section 5 of the Landlord and Tenant Act 1987 by a landlord offering leaseholders the right of first refusal.

Section 5A / 5B / 5C/ 5D Notices

Different types of Section 5 notices depending on how the landlord intends to dispose of their interest in the building (e.g., private sale, auction).

Section 13 Notice

A formal notice served by leaseholders when they intend to buy the freehold collectively (known as a collective enfranchisement claim).

Shared Ownership

A scheme that allows buyers to purchase a share of a property and pay rent on the remaining share, usually involving a housing association.

Short Lease

A lease with fewer than 80 years remaining, often affecting its market value and the cost of extension.

T

Tenancy

A legal arrangement where a tenant occupies property owned by a landlord and pays a rent, usually for a shorter term than a long lease.

V

Valuation Date

The date used for assessing the premium in lease extensions or enfranchisement claims (typically the date of the Initial Notice).

Valuation Report

 

A detailed assessment by a surveyor or valuer to determine the premium to be paid for a lease extension or enfranchisement.

Valuation Surveyor (Valuer)

 

A qualified professional who assesses property value, particularly for lease extensions and enfranchisement calculations.