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Why is there Leasehold Property Ownership? What Buyers Need to Know
When purchasing property in England and Wales, there is a clear distinction between properties being held on a leasehold basis as opposed to being held as freehold property. Leasehold property ownership derives from an historical feudal system, that has been phased out in many parts of the world, but remains a common way of owning property in England and Wales. Nearly every apartment in England and Wales is held on a leasehold basis. It is no wonder then that leasehold ownership has has a spotlight shone on it in the recent years, and is part of the UK government’s legal reforms to change some of the legislations surrounding property ownership.
Leasehold vs Freehold Property
Firstly, we set out the key features for freehold property:
- The property includes the land that it sits on, and is owned for an infinite time.
- No ground rent is payable, although for some freehold houses there may be an estate charge payable as a contribution towards estate management costs.
- The owner is responsible for the maintenance of the building, this includes the structures, roof and the foundations. It is entirely their property.
- Flexibility for alterations to be made to the building, subject to local planning laws and building regulations.
The key features for leasehold property include:
- Leasehold interest means that you hold the property for a fixed term, commonly the lease terms granted would be for 99, 125, 250 or 999 years from the lease commencement date.
- Ownership will be held under a lease whereby the freehold owner (the owner of the building) will be known as the Landlord or Lessor, and the leasehold (the property owner) will be known as the Tenant or Lessee.
- Annual ground is payable to the Landlord under leases granted prior to the Leasehold Reform (Ground Rent) Act 2022 coming into effect. Levels of ground rent can differ from property to property.
- Service charges are payable to the Landlord or an appointed management agent as a contribution towards the maintenance and repairs of the building and estate, and building insurance.
- Restrictions within the lease govern the leasehold owner’s rights and use of the property, including the terms on which the property can be let out, how the ownership can be transferred or sold, how common parts are managed and insured by the freehold owner, what alterations may be restricted.
Practical considerations for Buyers purchasing leasehold property
The remaining term of the lease is one of the most important considerations when purchasing leasehold property. The number of years remaining will affect the marketability and value of the property, some lenders will not consider the property as good security should the remaining term be below a certain number of years. The extension of lease terms is a niche area of property law and such rights and processes have typically been costly for a leasehold owner.
The ground rent and service charge structure and provisions should be reviewed as these need to be considered carefully as it can also affect the type of lenders that are willing to lend on the property, as well as having an effect on the marketability and affordability of the property.
Restrictions and regulations set out in the lease must be adhered to, any breach of a lease covenant (including non-payment of ground rent and service charges) could lead to a right of re-entry and forfeiture of the lease by the Landlord taking enforcement action in the courts. Complying with, or defending such action may be costly.
Key legal reforms
The Leasehold Reform (Ground Rent) Act 2022 effectively abolished ground rents on newly granted long residential leases granted after 14 February 2022.
Future reforms expected, particularly under the Leasehold and Freehold Reform Act 2024 will include:
- Easier and cheaper ways to extend lease terms.
- More control and rights for leaseholders in making decisions on how their buildings and common shared parts are managed.
- Potentially replacing the feudal system of leasehold ownership altogether, and replacing it with commonhold as introduced by the Commonhold and Leasehold Reform Act 2022.
Conclusion
Whilst there are more restrictions affecting the use, and potentially more charges payable under leasehold ownership in comparison to owning a freehold property, leasehold property is still an attractive ownership option for many property owners, particularly for overseas based owners who may want to own a ‘lock-up and leave’ holiday property, or a landlord to take care of maintenance and management for the building. The leasehold framework ensures that the Landlord is responsible for the maintenance, security and insurance maintained and implemented for the building, as it is in accordance with the Landlord’s legal obligations within its lease and required under current UK building safety regulations and guidance, which has also seen recent changes.
Our specialist residential property team are experienced in advising on leasehold property as well as freehold property, our aim is to ensure that you are fully aware of your legal obligations whilst owning a property in England and Wales. We would also be able to advise on the status of some of the key legal reforms mentioned in this article and how this may affect you buying property, whether it is for the first time in England and Wales, or as an existing property investor.
To get in touch with our Residential Real Estate team or APAC Desk, please fill out the form below.
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Meet Me at the APT: What the 2025 Settlement Means
In early September 2025, Manchester City and the Premier League reached a binding settlement that ends City’s challenge to the amended Associated Party Transaction (APT) rules. City has formally recognised that the November 2024 APT rules are valid and enforceable going forward, so the current framework remains in place. This follows the decision on 13 February 2025 in connection with the old rules, where an arbitration tribunal (Sir Nigel Teare, Christopher Vajda KC and Lord Dyson) held that the 2021-2024 APT rules were “void and unenforceable.” That finding potentially opens the door to retrospective claims relating to that period.
What are APT Rules and Why Were They Introduced?
APT rules were introduced in 2021 following the takeover of Newcastle United by a Saudi-led consortium, amidst concerns that a sudden influx of capital could confer an unfair advantage. The rules gave the Premier League powers to ensure that any commercial transactions between a club and an “Associated Party” represented Fair Market Value (FMV), to prevent owner-linked deals being used to gain a financial advantage over competitors who did not have access to such funds. In effect, the rules stop club owners from subsidising teams through favourable transactions with linked entities (e.g. sponsorships inflated above market value). The change was introduced at a meeting of all Premier League teams in December 2021, with Newcastle United and Manchester City voted against.
How Manchester City Came Under Scrutiny
Manchester City has been the target of scrutiny under the APT rules. In November 2023, a sponsorship agreement with First Abu Dhabi Bank was deemed not at FMV and in need of adjustment. Similar investigations were also reportedly opened into transactions with Emirates Palace and the Etihad Aviation Group.
Manchester City’s First APT Arbitration Challenge
On 24 January 2024, Manchester City requested arbitration under Section X of the Premier League Rules to set aside those determinations, arguing that Rules E.55-E.79 of the APT rules were unlawful. City contended that the relevant sections of the APT rules violated Sections 2 and 18 of the Competition Act 1998, and that they amounted to an “object restriction” of competition.
The First Award (25 September 2024)
Some of the key findings from the Tribunal on 25 September 2024, included:
1. Shareholder Loans
The APT framework allowed one form of form of subsidy–shareholder loans–to pass outside APT scrutiny, while other forms (such as inflated sponsorships) were caught, even though both were viewed as equally damaging to the Premier League’s Profitability and Sustainability objectives.
2. Object Restriction – February 2024 FMV Amendments
The February 2024 amendments broadened the definition of transactions that could be found above FMV and shifted the burden of proof from the Premier League onto the club. This increased risk of transactions being falsely deemed above market value to the extent that the rules operated as an object restriction.
3. Public Law – Procedural Unfairness
The FMW assessment process lacked transparency: clubs were unable to see or comment on comparable-transaction data used in the test prior to determination.
The Severance Question and the Second Award (13 February 2025)
From 27 January 2025, the Tribunal considered whether the unlawful parts of the 2021-2024 APT rules could be severed so the rest could stand. Applying the blue pencil test from Tillman v Egon Zehnder which permits a tribunal to delete offending wording but not add or rewrite any language), the Tribunal found:
- Textual severance: the shareholder-loan exclusion could be crossed out without adding words; and
- Residual bargain/consideration: the remaining regime would still constitute a valid bargain.
However, the test ultimately failed on the third limb of “overall effect”. Removing the exclusion would fundamentally alter the regime by bringing shareholder loans–a central and established financing tool for clubs–from no APT scrutiny to full scrutiny (including potential FMV re-pricing), materially expanding the rules’ operation. Since the defect could not be cured by targeted deletion, the Tribunal declared the 2021-2024 APT rules void and unenforceable.
What is Affected by the “Void” Finding
The main impact of this ruling is confined to the historic period (2021-2024). The Tribunal did not strike down the current APT rules, which were adopted in November 2024 and remain unaffected by the awards.
The determination that APT rules were void between 2021 and 2024 means clubs scrutinised during this period could potentially seek damages for Associated Party Transactions that did not occur or were reduced in value due to the unlawful regime (e.g. loss of chance claims).
The amended framework remains in force. A key correction is that shareholder loans are now in scope of APT/FMV oversight, subject to transitional carve-outs for certain pre-22 November 2024 loans. It is not the case that all existing shareholder loans remain entirely outside the new rules.
Other Affected Clubs and Transactions
Manchester City was not the only team impacted by APT rules between 2021 and 2024. The awards and public reporting show multiple APTs were notified to the Premier League during that period, with Chelsea Football Club’s transfer of its women’s team to BlueCo noted as an example of intra-group asset transfers attracting review. Other clubs, such as Newcastle United, that made APTs during the relevant period may seek damages on the basis that these deals would have had a higher value but for the now-nullified APT rules–even where the Premier League did not directly require an adjustment.
Settlement Ends the APT Dispute (September 2025)
In early September 2025, Manchester City and the Premier League privately concluded their protracted dispute by reaching a settlement:
- City has formally recognised that the November 2024 APT rules are valid and enforceable going forward, effectively abandoning its legal challenge to those amendments.
- In return, the Premier League secures legal certainty for its updated framework, which subjects all future associated-party deals–including shareholder loans–to FMV oversight.
- While the voiding of the 2021-2024 rules may open the way for retrospective claims, it does not undermine the integrity of the current regime.
City has now acknowledged the enforceability of the Premier League’s current APT framework, however clubs may now focus on potential claims relating to the historic period.
What Next?
It will be interesting to see whether any historic claims do manifest, given that the position going forward now seems settled. The affected Clubs may see little value in further protracted litigation with the League.
Under the current rules, clubs should anticipate continued FMV scrutiny of owner-linked sponsorships and shareholder financing. Preparing evidence of market benchmarks and engaging early with the League on methodology (including access to comparable data) will be essential.
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Quastels Recognised in the Legal 500 UK 2026 Rankings
We are pleased to announce that Quastels has been recognised in this year’s The Legal 500 UK 2026 rankings across four categories:
- ‘Leading Firm’ in Commercial Property: Corporate Occupiers
- ‘Leading Firm’ in Private Client: Personal Tax, Trusts and Probate
- ‘Leading Firm’ in Industry Focus: Hospitality & Leisure
- ‘Firm to Watch’ in Industry Focus: Retail & Consumer
We are pleased to have retained our ‘client satisfaction’ badge, which reflects our dedication to exceptional service and expertise across the firm.
About The Legal 500
The Legal 500 is widely regarded as one of the most respected legal directories, evaluating law firms and individual lawyers through rigorous independent research, client testimonials, and industry insight. Earning a place in The Legal 500 reflects a firm’s commitment to delivering exceptional legal services and cultivating strong client relationships.
At Quastels, we are proud of our longstanding reputation for excellence and client care, and we are delighted to be recognised in this year’s rankings.
Key Rankings
Commercial Property: Corporate Occupiers
For five consecutive years, our Commercial Property team has been recognised in the Commercial Property: Corporate Occupiers category.
The ranking highlights our extensive legal expertise, particularly in:
- Portfolio management
- Acquisitions
- Disposals
Our practice spans the retail, leisure, and office sectors, delivering bespoke advice to businesses navigating commercial property matters.
Recognised Legal Professionals
The Legal 500 ranking specifically commends our department heads and key individuals for their contributions:
- Mark Cornelius (Partner and Co-Head)
- Naomi Jones (Partner and Co-Head)
- Jonathan Gross (Partner)
- Aisha Anjum (Senior Associate)
Client Testimonials
The following testimonials have been collated independently by the Legal 500 research team.
“Quite frankly, it’s the team’s proactive nature, the partners are available when you need to speak to them, and they are always trying to provide a solution for you and the underlying client.”
“The team have a deep understanding of our business and tailor their advice accordingly; we know we can rely on them to be concise and responsive to our complex and changing needs.”
“Quastels have gone above and beyond acting on our behalf. The due diligence checks have been extensive, and they utilised relationships with firms abroad to ensure that the recorded notice was served promptly and at a reasonable cost to us as the client.”
Private Client: Personal Tax, Trusts, and Probate
Our Private Wealth team has been recognised for the first time in The Legal 500, in the Private Client: Personal Tax, Trusts, and Probate category.
The ranking highlights our expertise in existing and emerging fields, including:
- Tax
- Trusts
- Succession Planning
- Tax aspects of cryptoassets
Recognised Legal Professionals
The Legal 500 specifically mentions the work and expertise of:
- Ben Rosen (Partner and Head of Department)
- Jack Burroughs (Senior Associate)
Client Testimonials
The following testimonials have been collated independently by the Legal 500 research team.
“This is a team which is high energy, extremely responsive and authentic.”
“Ben Rosen is a delight. He absolutely loves what he does which makes him really fun to work with. He inspires great confidence with clients and has the sort of grasp of complex material to be able to articulate it clearly.”
“Ben Rosen – excellent solicitor. Prepared to go the extra mile for a client. Highly recommended.”
Industry Focus: Hospitality & Leisure
This year, we are pleased to further expand our presence in The Legal 500 rankings, being named a ‘Leading Firm’ in the Industry Focus: Hospitality & Leisure category.
Our Hospitality & Leisure sector offering received recognition for assisting clients across the restaurant, theatre, hotel and pub sectors, amongst others, with key work including:
- Sales
- Restructurings
- Commercial contracts
- Fund structuring
- Asset management
Recognised Legal Professionals
The Legal 500 recognised these key players in our Hospitality & Leisure group:
Client Testimonials
The following testimonials have been collated independently by the Legal 500 research team.
“We have used Quastels numerous times and they can always find a commercial solution to sometimes complex problems, not just looking at the legal ramifications but the commercial ones as well.”
“One of the standout features of Quastels is the diversity within their team – not just in background, but in experience and perspective. This diversity enhances their ability to handle complex, cross-disciplinary issues with nuance and agility.”
“I’m especially grateful to Adam Convisser for his time, expertise, and unwavering support. In moments of stress, he reassured me and guided me through challenges with professionalism, empathy, and clarity. I’ve developed a genuinely strong relationship with him, which speaks volumes about the quality of service and personal attention Quastels provides.”
Industry Focus: Retail & Consumer
We are pleased to have retained our standing as a ‘Firm to Watch’ in the Industry Focus: Retail & Consumer category. Our Brands & Luxury sector offering received recognition for its cross-disciplinary approach, providing legal solutions across corporate, commercial, real estate, employment, and governance issues.
Recognised Legal Professionals
The Legal 500 highlighted the contributions of:
Thank You
We are incredibly proud to be growing our recognition in The Legal 500, which reflects the development of the firm over the past twelve months. A heartfelt thank you to our clients, colleagues and The Legal 500 for their continued support and kind words. Our growing recognition motivates us to continue delivering fantastic service across all of our practice and sector areas.
If you require legal assistance, please contact us, we would be delighted to help.
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