Blog > Can you do equity release on leasehold flats?

Can you do equity release on leasehold flats?

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By Richard Groom • 6th June 2023 • 5 min read

Page last reviewed: 21st October 2024 Next review date: 21st October 2025

Do leasehold flats qualify for equity release?

Written in line with our editorial policy.

It is possible to get equity release on leasehold flats – as long as the length of time remaining on the lease meets the lender’s minimum criteria. In this article, we look at which leasehold flats qualify, and how to find a solution if at first it looks like your flat isn’t eligible.

Flats in England, Wales and Northern Ireland are often owned on a leasehold basis and will qualify for equity release if the lease is long enough. (Scotland is a different situation as leasehold is now an extremely rare form of tenure.)

There are around 3.4 million leasehold flats in England alone, so thousands of leaseholders might be wondering if they are able to boost their later life finances with equity release.

In our guide to equity release on leasehold flats, we cover the following:

After you have read our guide to equity release on leasehold flats, you’re welcome to call us on 0808 178 3055, or request a call back and we’ll be happy to help further. Our selected advisers specialise in equity release and can advise on your property’s eligibility for a lifetime mortgage or home reversion plan.

How does equity release work?

Equity release is aimed at later life homeowners (aged 55+) who want to unlock some of their property wealth without having to sell up and move home. Thousands of people have arranged equity release on leasehold flats, detached homes and all sorts of properties in between.

The most popular form of equity release is a lifetime mortgage. This involves releasing a percentage of your home’s value as a secured loan. You still retain ownership of your property and have the same right to live there as before. 

The loan plus interest is typically paid back through the sale of your home when you pass away or move into permanent long-term care. You may be able to repay it sooner however, although this may involve early repayment charges. 

If you wish to prevent or delay your loan from growing in size, you can select an interest-only lifetime mortgage. This allows you to pay off some or all of the interest each month for as long as you want to. By doing so, you can keep more equity in your home for you or your heirs.

Additionally, some lenders allow voluntary partial repayments to pay back some of the original loan each year (typically up to 10% per year) without penalty. This might enable you to reduce your loan size or even pay it off over several years.

When it comes to arranging equity release on leasehold flats, subject to factors we discuss below, you will have much the same options as any other property owner. From choosing between lump sum plans and drawdown schemes, to benefitting from enhanced terms if you are eligible. 

Can you get equity release on your leasehold flat? To find out if you’re eligible and how much you could borrow, check here or talk to one of our friendly consultants by calling 0808 178 3055 or request a call back.

What is a leasehold flat?

A leasehold arrangement is where you buy the flat but not the land it sits on. The land is owned by the freeholder, who sells you the flat for a set period of time but retains ownership of the land. 

You pay the freeholder (also known as a landlord) ground rent, as well as a service charge. In return, they are responsible for maintaining the building’s roof and foundations, as well as shared areas such as hallways and gardens. The freeholder could be an individual, or an organisation such as a management company, a local authority or a housing association.

A much less common arrangement is a freehold where you own the flat outright, with no separate freeholder to pay ground rent or a service charge to. Another type of property tenure is when leaseholders come together to own the freehold of the building through a residents’ management company.

Issues around leasehold tenures were once again in the news following the government’s pledge to introduce a draft bill on leasehold and commonhold reform. This bill, announced in the King’s Speech on 17 July 2024,  will build on the Leasehold and Freehold Reform Act 2024 and aims to further transform the leasehold system. Planned reforms include strengthening leaseholders’ rights to extend their lease, buy their freehold (enfranchisement) and take over building management (Right to Manage). 

Additionally, the bill will revitalise commonhold ownership by modernising the legal framework and restricting the sale of new leasehold flats. It will also address the issue of existing ground rents, regulating them to protect leaseholders from unregulated and unaffordable costs.

Can you get equity release on leasehold flats?

Yes, you can take out equity release on a leasehold flat – as long as the property meets the lender’s criteria. Each equity release provider has their own criteria and rules regarding the type of leasehold properties they accept. 

These criteria include the following areas:

The length of the lease

Leases tend to be fixed for 99, 125 or 999 years from the time the property is built, but it can be for any length of time. The time remaining on the lease decreases each year, but leaseholders have a legal right to extend a lease.

Equity release lenders each have a minimum requirement for the number of years left on your lease. The table below shows some examples.

Equity release: providers’ minimum lease criteria

ProviderMinimum remaining lease
AvivaThe number of years left on your lease plus the age of the youngest borrower must equal at least 160. As an example, if the youngest borrower is 75, you’ll need to have at least 85 years remaining on the lease.
Canada LifeThe leasehold tenure must have an unexpired term of at least 155 years minus the age of the youngest borrower, or 75 years (whichever is the greater).
JustThere must be a minimum remaining lease of 120 years.
Legal & General The remaining term plus the age of the youngest borrower at completion must be at least 175 years.
Pure RetirementLending criteria differ across age groups. For example, with the Pure Classic lifetime mortgage, where the youngest applicant is age 66-70 there needs to be at least 114 years remaining on the lease.

I don’t have enough years on my lease to be eligible for equity release

If you don’t have enough years remaining on your lease, you may be able to extend its length so that your flat becomes eligible for equity release.

The good news is that if you own your flat, you have a legal right to extend your lease providing you meet certain conditions: 

  • You have owned your lease for the last two years. 
  • The lease must have an original term of more than 21 years when it was first granted. 
  • Your landlord is not a charity providing a flat for you as part of their work. 
  • It is not a business or commercial lease. 

The Leasehold Advisory Service has put together information on how to apply to extend your lease on their page “How can I extend my lease?”. In short, you can do this in two main ways: the informal route and the formal route. 

Informally, you can ask the freeholder whether they are interested in negotiating a lease extension, but they are under no obligation to respond or agree to your request. 

If you cannot reach an agreement, or they do not respond, then you can do things formally. This where you serve a formal notice on your landlord outlining your claim and your terms. They must reply to you and adhere to timescales set by law. However, this option can be complex, so seeking legal advice is recommended.

Another option might be to buy the freehold or a share of the freehold with owners of other flats in the building.

These solutions will incur some costs and legal fees, although the good news is that you may be able to cover these from some of the money you release.

You can get help and advice on these solutions from our selected equity release advisers. They can also connect you with solicitors with equity release expertise and experience to help. Please call us on 0808 178 3055, or request a call back and we will be happy to arrange an appointment for you.

The nature of the lease

Lenders will typically want to see the lease to check that it meets certain additional criteria. They will check that the lease is ‘marketable’ with no onerous clauses that could negatively affect their ability to sell the property at the end of the equity release plan. Examples could include excessive service charges or ground rents. 

The type of flat

Not all leasehold flats are the same. Some will be in a purpose-built block, some in a converted house, some above a shop or other commercial premises, and so on. 

Lenders each have their own criteria for the type of flats they will and will not accept. For example, some providers will not accept ex-local authority flats, basement flats or flats above commercial premises. Some lenders may also refuse flats in blocks above a specified number of storeys.

Please note: Information about providers’ lending criteria is correct at time of publication. Providers will have additional relevant lending criteria for equity release on leasehold flats, for example they will typically request a survey to check that the flat is in good and saleable condition. Please contact us to talk to one of our selected advisers about your particular circumstances and eligibility for equity release on leasehold flats.

Are there other ways to release equity on leasehold properties?

If your flat is not eligible for an equity release plan, there may potentially be alternative ways to release equity from it. These might include remortgaging to release equity or taking out a retirement interest only mortgage (RIO)

If you are under the equity release minimum age of 55, please see our article ‘How to release equity if you are under 55’ for information on some options.

Getting advice on leasehold equity release.

If you have been wondering “Can you get equity release on a leasehold flat?” then we hope this article has answered some of your questions. For more information or advice about equity release on leasehold flats, why not talk to one of our selected advisers? They are equity specialists who can discuss your circumstances and offer further help.

Just call us on 0808 178 3055 or request a call back and we’ll arrange a no-obligation appointment for you.

About Richard Groom. A writer with 20+ years’ experience across several sectors including financial services, Richard has a passion for writing clear and simple content on even the most complex of subjects. In his spare time, Richard loves exploring the hills and mountains of the UK on long walks with his faithful cocker spaniel. Follow Richard on LinkedIn

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