Letting a leasehold flat: the rules your lease adds on top

Most landlord guidance is written as though you own the building. A large share of buy-to-let stock is flats, and if you own a flat you almost certainly own a lease, not the freehold. That puts a third party in the middle of your tenancy: the freeholder, or the managing agent acting for them.

The result is that you answer to two rulebooks at once. Housing law says one thing. Your lease says another. Most of the time they coexist quietly. Occasionally they contradict each other outright, and the landlord in the middle is the one who gets caught.

This guide is about that overlap: what your lease can stop you doing, what costs you cannot pass to your tenant, and the one clash the Renters' Rights Act created that a lot of leaseholder landlords have not spotted yet.

First question: does your lease actually let you sublet?

Not all leases do. Some prohibit subletting entirely, some allow it only with the freeholder's written consent, some allow it freely but require you to notify and pay a registration fee, and some are silent.

Letting in breach of a covenant against subletting is not a technicality. It is a breach of the lease, and the ultimate remedy for breach of a lease is the freeholder seeking to end your lease altogether (forfeiture). In practice forfeiture of a long lease is difficult and rare, and a mortgage lender will usually intervene, but "rare" is a bad thing to rely on when the asset is a flat.

Before you advertise, read the lease itself rather than remembering what the solicitor said at purchase. You are looking for:

• an alienation clause (subletting, assignment, parting with possession),
• whether consent is required, and whether it must not be unreasonably withheld,
• any requirement to notify the freeholder after letting, usually within a set number of days,
• any fee payable for consent or for registering the tenancy.

If consent is required, get it in writing and keep it. If your lease requires notification and you skip it, you can be in breach while doing everything else correctly.

Once consent is in writing, the let itself can start. From £7.99 a month, LetCompliance keeps the freeholder's consent in the flat's documents and runs the let from the same record: a shareable advert, online applications and an assured periodic tenancy agreement pre-filled from your records. Get started

Service charges are your cost, not your tenant's

This trips up new leaseholder landlords more than anything else. You pay the service charge to the freeholder. Your tenant pays rent to you. Those are separate relationships, and you generally cannot bolt a share of the service charge onto the tenancy as an extra charge.

Under the Tenant Fees Act 2019, the payments you can require from an assured tenant are a closed list. A service charge levied by your freeholder is not on it. If you want the service charge covered, it has to be priced into the rent, which means you need a realistic figure before you set the rent, not after.

Two protections are worth knowing, because they are yours as a leaseholder and most landlords never use them:

Service charges must be reasonable. Under the Landlord and Tenant Act 1985, costs are only recoverable to the extent they are reasonably incurred and the works are of a reasonable standard. You can apply to the First-tier Tribunal to determine whether a charge is payable.

The 18-month rule. Section 20B of the same Act says that if costs were incurred more than 18 months before a demand is served on you, you are not liable for that part of the charge. The exact wording:

"If any of the relevant costs taken into account in determining the amount of any service charge were incurred more than 18 months before a demand for payment of the service charge is served on the tenant, then... the tenant shall not be liable to pay so much of the service charge as reflects the costs so incurred."

There is an important exception: the limit does not bite if, within that 18 months, you were notified in writing that the costs had been incurred and that you would be required to contribute. So a bill landing two years late is not automatically unenforceable, but it is worth checking whether the notification was ever given.

Section 20: the bill that arrives without warning

If the freeholder wants to carry out major works, they must consult leaseholders first. The consultation threshold is low: broadly, where the works would cost any one leaseholder more than £250, the statutory consultation process applies. Skip it and the freeholder's recovery is capped at that £250 per leaseholder, unless a tribunal grants dispensation.

For a landlord this matters in two ways.

Cash flow. A roof, a lift, or post-Grenfell remediation can produce a five-figure demand on a flat generating a few hundred pounds a month. It can turn a profitable leasehold buy-to-let into a loss-making one, and it arrives on the freeholder's timetable, not yours.

Your right to be heard. The consultation is with you, the leaseholder, not your tenant. If the notices go to the flat, your tenant may bin them. Make sure the managing agent has your correspondence address, and treat anything from them as post you actually open. A missed consultation window is a missed chance to challenge the scope or the contractor.

The pet clause problem

Here is the genuinely new one, and it is not hypothetical.

The Renters' Rights Act gives tenants a right to request a pet, and requires the landlord not to unreasonably refuse. The decision has to be given in writing within 28 days of the request. If you reasonably ask the tenant for more information, the clock moves to 7 days after they reply. And where your lease means the freeholder has to consent as well, the Act makes room for you to ask them before you decide.

Now suppose your head lease prohibits pets, as a great many flat leases do. You cannot grant your tenant something your own lease forbids. Permitting the pet puts you in breach of covenant; refusing without care puts you on the wrong side of the tenancy legislation.

The practical answer is that a refusal grounded in a genuine head-lease prohibition is very likely to be reasonable. You're not being difficult: you don't have the power to consent. But the process still matters:

• Respond in writing, within the 28 days. Silence is not a refusal, and a missed deadline is its own problem.
• State the actual reason and quote the lease clause. "The head lease at clause 4.12 prohibits keeping animals in the flat without the freeholder's consent" is a reason. "No pets" is a policy, and a policy is what the Act was written to stop.
• Where the lease allows pets with the freeholder's consent, ask them. Passing the request up is more defensible than refusing on your own authority, and if the freeholder says no you have documented why you cannot say yes.

The same logic applies to other head-lease restrictions your tenant will bump into: no short lets, no business use, flooring and noise covenants, restrictions on bin or bike storage. Put the relevant ones in the tenancy agreement so the tenant is bound by them too, rather than discovering them through a complaint.

Building safety, insurance and the rest

Insurance. The freeholder normally insures the building and recharges you through the service charge. You still need landlord contents and liability cover for your own flat, and you should check the buildings policy actually covers letting, because some do not without notification.

Flats above 11 metres. Building safety requirements introduced after Grenfell can affect saleability, remortgaging and insurance. If you are buying or refinancing, ask what fire safety information exists for the block before you commit, not after.

Ground rent. Under the Leasehold Reform (Ground Rent) Act 2022, most new long residential leases are limited to a peppercorn, i.e. nothing of real value. Older leases keep whatever they say, including the doubling clauses that caused so much trouble.

Wider leasehold reform is still part-finished. The Leasehold and Freehold Reform Act 2024 has been commenced in stages, and significant parts, including the reformed enfranchisement valuation scheme, are not yet in force. Treat any article promising that leasehold has been abolished or that extension costs have already fallen with caution, and check the current position before making a decision that depends on it.

A short checklist before you let a leasehold flat

1. 1Read the lease for the alienation clause. Consent required? Notification required? Fee payable?
2. 2Get consent in writing if it is needed, and keep it with the tenancy file.
3. 3Get a realistic service charge figure, including any known upcoming works, before you set the rent.
4. 4Give the managing agent your own correspondence address, so Section 20 notices reach you and not your tenant's recycling.
5. 5List the head-lease restrictions that bind the occupier (pets, flooring, noise, short lets, business use) and reflect them in the tenancy agreement.
6. 6Diarise the service charge year end, and keep demands. The 18-month rule only helps if you can show when the demand arrived.

On a flat, the lease is the document that decides what you're allowed to agree to, so it shouldn't sit in a folder from the day you bought. LetCompliance keeps it in the property's documents, next to the freeholder's consent, the signed tenancy agreement and your gas, electrical and EPC dates. When a pet request arrives on a Tuesday with a 28-day clock, the clause is one click away. Log the service charge as an expense and the profit and loss for that flat shows what it takes out of the rent. Get started: your first property is free.

Honest caveat

Leases are individually drafted and none of the above overrides yours. The statutory points here are general law and apply whatever your lease says: the 18-month rule at section 20B, service charge reasonableness, the Section 20 consultation threshold and the pet response deadline. Everything about your subletting rights, pets, flooring and use is a question of what your particular lease says, and that is a document a solicitor should read if a real decision turns on it.

If a freeholder is threatening forfeiture, or a service charge demand looks wrong for a reason that matters financially, that is a specialist leasehold solicitor's question rather than a general landlord one.