Can you do equity release on leasehold houses?

Explore if your leasehold house qualifies for equity release

It is possible to arrange equity release on leasehold houses – providing the amount of time remaining on your lease meets the lender’s minimum criteria. 

Many houses across England, Wales and Northern Ireland are owned on a leasehold basis (although it’s now rare in Scotland). Providing the time remaining on the lease is long enough, these homes may be eligible for an equity release plan. 

In this guide to equity release on leasehold houses, we cover the following:

• How does equity release work?
• What is a leasehold house?
• Can you get equity release on leasehold houses?
• What some equity release lenders say about leasehold houses.
• Getting advice on leasehold equity release.

To speak to a specialist adviser about unlocking the tax-free money from your leasehold house, call our friendly team on 0808 178 3055, or request a call back. 

How does equity release work?

Before we get into the eligibility of leasehold houses for equity release, it’s worth understanding how a plan works. Equity release is a financial product for homeowners aged 55+ who want to unlock some of their property wealth without having to make any monthly repayments.

The most popular form of equity release is a lifetime mortgage and is available as a lump sum or drawdown plan. After releasing a percentage of your home’s value, you’ll still retain full ownership of it. The loan plus interest is typically paid back through the sale of your home when you pass away or move into permanent residential long-term care.

Alternatively you can arrange a home reversion plan, which involves selling a portion of your property to a provider in exchange for a lump sum payment or a regular income. There is no interest on this loan, but you will receive less than the market value for your property. You stay in your home as a tenant with no rent to pay until you pass away or move into long-term care.

Read ‘how to release equity if you are under 55’ if you are under the minimum age for a plan.

Want to know how much you could unlock from your home? Check your eligibility and get your free quote now.

What is a leasehold house?

A leasehold purchase is where you buy the property but not the land it sits on. The land belongs to the freeholder, who sells you the property for an agreed period of time. You can have leasehold houses, bungalows, maisonettes and flats.

As they retain ownership of the land, you agree to pay the freeholder – or landlord – ground rent, in addition to a service charge depending on the type of property you buy. The freeholder isn’t always a person; sometimes it is a management company, a local authority or a housing association. You can ask the landlord to sell you the freehold for your leasehold home if you wish.

Can you get equity release on leasehold houses?

Yes, you can take out equity release on a leasehold house, but your home will need to meet the lender’s criteria to be eligible. This will include having a specific length of time left on the lease. 

If you don’t have enough years remaining on your lease, you may be able to extend its length in order to arrange an equity release plan on your home. 

It is important to remember that these solutions will incur costs and legal fees. However, if you are arranging an equity release plan then you may be able to cover some of them from the money you release.

If you do explore the option of equity release on your leasehold property, you’ll need to provide certain information to your chosen lender, such as:

• Any service charge and ground rent you pay.
• Who is responsible for buildings insurance.
• What the sell-on fees are.
• How many years are left on the lease.

What some equity release providers say about leasehold properties

There are different equity release providers, each with their own criteria and requirements. You may find that one lender will consider your leasehold property whilst another does not. 

The great news is that our selected advisers can take your details over the phone and run a search to find the right provider and plan for your individual needs.

Here are some of the equity release providers who you might be able to arrange a plan with by coming through Equity Release Wise:

• Aviva. Your leasehold house must have at least 160 years left, minus the age of the youngest borrower. For example, if the youngest borrower is 60, at least 100 years must be left on the lease.
• Just. There must be a minimum remaining lease of 120 years.
• Canada Life. Will consider leasehold houses with an unexpired term of at least 155 years minus the age of the youngest borrower, or 75 years, whichever is the greater. 
• Pure Retirement. Your property must have a minimum of 120 years remaining on the lease.

If you decide to explore the option of unlocking some of the tax-free cash from your leasehold property, our selected advisers will be able to look into this for you. 

Getting advice on leasehold equity release

If you have a leasehold house and you are thinking about equity release, do make sure you speak to our friendly team. We can connect you with our selected advisers, who are specialists in equity release. They can discuss your individual circumstances and offer as much help as you need to decide if a plan is right for you.

Simply call us on 0808 178 3055 or request a call back and we’ll put you in touch with someone who can help. Alternatively, check your eligibility and get an initial indication of how much tax-free cash you could unlock.

About Clare Yates. With over a decade’s experience writing about later life financial planning, Clare offers a wealth of knowledge about equity release, pension annuities, wills, LPAs and more. When she isn’t writing, Clare likes to spend her time baking and going on walks with her husband, two children and their rescue dog. Follow Clare on LinkedIn