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 forfeiture — the freeholder seeking to end your lease altogether. 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:

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.

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 is the single most common reason a leasehold buy-to-let goes from profitable to loss-making, 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, extendable by a further 7 days where more information is sought.

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 are not being difficult, you lack the power to consent. But the process still matters:

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

At LetCompliance we treat the lease as part of the property record rather than something filed at purchase and forgotten, because on a flat it is the document that decides what you are allowed to agree to. The pet request→ that arrives on a Tuesday with a 28-day clock is much easier to answer when the clause is one click away.

Honest caveat

Leases are individually drafted and none of the above overrides yours. The statutory points here — the 18-month rule at section 20B, service charge reasonableness, the Section 20 consultation threshold, the pet response deadline — are general law and apply whatever your lease says. 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.