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When a house is sold as leasehold, the buyer is effectively a tenant with a very long term rental.
The home and the ground the home is built on remains in the hands of the freeholder. The leaseholder has to pay an annual “ground rent” to the freeholder. They are also required to ask the freeholder for consent if they want to make any changes to the property, such as building a
conservatory or changing the windows.
In the past, leasehold property owners were generally charged just a “peppercorn” ground rent, sometimes as little as £1 a year.
Developers then began inserting clauses into leasehold contracts where the ground rent was set at £200-£400 a year, some that double every 10 years. First-time buyers were frequently told that leases were “virtually freehold”, but these clauses meant that the ground rent would soon increase to ridiculous levels.