Freehold vs Leasehold Maisonettes: How Lenders Differ
The tenure of your maisonette — freehold or leasehold — has a significant impact on how lenders treat it. A freehold maisonette, where you own both the property and the land it sits on outright, is treated by most lenders in the same way as a freehold house. There are no lease length concerns, no service charge commitments, and no ground rent obligations. The property is yours completely, and most lenders will offer their full range of residential mortgage products without restriction.
Freehold maisonettes are less common than leasehold ones, but they do exist — particularly where a terraced house has been subdivided into upper and lower maisonettes with each sold on a freehold basis. There can be complexities in freehold maisonette arrangements around shared party walls, shared roof responsibilities, and rights of access, and lenders will want to see that these are clearly defined in the title deeds. Where obligations between adjacent freeholders are unclear, a lender may require indemnity insurance or a formal deed of covenant before proceeding.
Leasehold maisonettes — the more common form — are subject to the same lease length requirements as leasehold flats. Most lenders require a minimum remaining lease term, typically 70 to 85 years at the point of application, and the quality of the lease terms matters as well as the length. Ground rent provisions are particularly important: since the Leasehold Reform (Ground Rent) Act 2022 abolished ground rents for new leases, many lenders apply restrictions to properties with historic escalating ground rents or ground rents above a certain level. A lease with a ground rent that exceeds 0.1% of the property's value annually can make a property effectively unmortgageable with many mainstream lenders.
Where a maisonette leaseholder holds a share of the freehold — either through a residents' management company or through a formal share of freehold arrangement — lenders generally take a more favourable view. A share of freehold gives the leaseholder ultimate control over the building, removes the dependency on a remote freeholder, and eliminates many of the risks associated with leasehold reform. Lenders recognise this and typically apply more favourable terms to shared freehold maisonettes than to those with external freeholders.
Service Charges, Ground Rent, and Leasehold Obligations
Leasehold maisonettes are subject to service charges — regular payments to the freeholder or management company covering the costs of maintaining shared parts of the building, including the roof, external walls, shared hallways, and any communal gardens. Lenders assess service charges as an ongoing financial commitment that affects affordability, and very high service charges can reduce the amount you are able to borrow. Some lenders also require confirmation that service charges are up to date before proceeding, as arrears can create complications with the security.
The management of a maisonette building is an important practical consideration. A well-managed building with an organised residents' management company, regular maintenance, and a funded reserve will command higher valuations and face fewer lender concerns than one with poorly maintained common areas, ongoing disputes between leaseholders, or a negligent freeholder. Evidence of recent building maintenance, current insurance, and an up-to-date service charge statement is typically requested as part of any leasehold remortgage.
Major works provisions — the clauses in a lease that govern how major repairs and improvements are funded — are scrutinised by lenders because they create potential future financial obligations for leaseholders. A lease that allows the freeholder to demand large one-off payments for major works without a cap can be a concern. Where significant major works have recently been carried out or are known to be pending, lenders may seek confirmation of the estimated costs and how they will be funded before proceeding.
Ground rent is a separate issue from service charges. For maisonettes with older leases, ground rents may have been set at modest historic levels that are unproblematic for lenders. However, some leases — particularly those from the 2000s and 2010s — include escalating ground rent provisions that double every 10 or 25 years. These provisions have been widely criticised and have affected the mortgageability of affected properties. If your maisonette has an escalating ground rent, investigating a lease variation to remove the escalation clause — or purchasing the freehold — before remortgaging may open up more lender options.
