Can I Get Equity Release on a Leasehold Property?

How lenders assess leasehold properties

When a lender considers a leasehold property for equity release, the key concern is how much lease remains — not just now, but at the point when the loan is likely to be repaid. Because a lifetime mortgage may run for 20, 25, or even 30 years, lenders look at the expected remaining lease term at the end of that period.

Most lenders require at least 75 years remaining on the lease at the time of application, and some require considerably more — 80, 85, or even 90 years in certain cases. The logic is straightforward: as a lease shortens below around 80 years, the property becomes progressively harder to sell and mortgage, which affects the lender's security.

If your lease currently has, say, 85 years remaining and you are 65, a lender might estimate a 20-year loan term and want to see at least 75 years remaining at the end of that period — meaning the current lease length of 85 years may be borderline. An adviser can check specific lender criteria for your situation.

Flats versus houses

The vast majority of leasehold properties in England and Wales are flats, though some houses are also held on long leases. Lenders generally treat leasehold houses and leasehold flats differently.

For leasehold flats, additional considerations apply:

• Ex-local-authority properties — many lenders are more cautious about ex-council flats, particularly those in high-rise blocks. The concern relates to construction type, potential cladding issues, and resale value. Some lenders will not accept ex-local-authority high-rise flats at all.
• High-rise blocks — properties above a certain height (often above six storeys) may be subject to additional restrictions, particularly since the Grenfell Tower fire and subsequent building safety legislation.
• Service charges — lenders will check that service charges are not unreasonably high, as these affect the property's affordability and attractiveness to future buyers.

Ground rent — an important check

Ground rent is the annual payment a leaseholder makes to the freeholder. Following the Leasehold Reform (Ground Rent) Act 2022, ground rents on new leases in England and Wales were restricted to a "peppercorn" (effectively zero) for most residential properties.

However, many existing leases still carry ground rents — some with escalation clauses that can cause them to double every 10 or 25 years, creating very high ground rents over time. Lenders are alert to these clauses and may decline or restrict lending where ground rent is excessive or where escalation clauses create uncertainty.

If your lease has a ground rent above a modest threshold (often cited as 0.1% of the property value per year) or contains doubling clauses, it is worth checking with an adviser whether this affects your equity release options.

Extending your lease before applying

If your lease length is borderline, extending the lease before applying for equity release may open up more lender options and potentially better terms. Leaseholders in England and Wales generally have a statutory right to extend their lease by 90 years (for flats) at a zero ground rent after two years of ownership.

Lease extension does have costs — a premium paid to the freeholder plus legal and valuation fees — but these are often worthwhile if they unlock access to equity release that would otherwise not be available. An adviser can help assess whether this makes sense in your situation.

Getting specialist advice

Leasehold properties represent one of the areas where the choice of lender matters most. Not all lenders accept all leasehold situations, and a whole-of-market adviser is essential to identify which lenders will consider your property and on what terms.

If your property has any of the complicating features described above — short lease, ex-local-authority, high ground rent, high-rise — specialist advice from an adviser experienced in this area is particularly important.

For a broader overview of equity release eligibility and how property type affects your options, see our guide: How much can I release with equity release?