REFERENCE · Last updated August 2026
Leasehold & mortgage terms, in plain English
No jargon, no padding — just what these terms actually mean and why they matter when you're buying.
- Ground rent
- A fee paid annually to the freeholder, separate from your service charge. Older leases sometimes include escalating clauses (e.g. doubling every 10–25 years) which can make a property harder to mortgage or sell later — always check the exact wording, not just the current amount.
- Marriage value
- An additional cost applied when extending a lease with fewer than 80 years remaining. It represents the increase in the property's value once the lease is extended, split between leaseholder and freeholder — which is why extensions get sharply more expensive once you cross below the 80-year threshold. Due to be removed under the 2026 leasehold reform.
- Peppercorn rent
- A nominal or zero ground rent — effectively "free" in practical terms. Newer leases and post-reform leases increasingly move toward this model rather than an escalating ground rent.
- Service charge
- An annual (sometimes billed quarterly) fee covering the maintenance of shared parts of a building — cleaning, buildings insurance, lifts, gardens, management fees. Not published on property listings, and can vary significantly year to year. See our full service charge red flags guide.
- Section 20 notice
- A formal notice landlords/management companies must serve before carrying out major works above a set cost threshold per leaseholder. These bills sit outside your normal annual service charge and can run into the thousands — always ask if one is active or recently completed.
- EWS1 form
- An External Wall Fire Review certificate, used to assess cladding-related fire risk on some buildings, mainly taller blocks built or clad in certain periods. Not all lenders require one, and the Building Safety Act 2022 protects many qualifying leaseholders from remediation costs — but it can still affect mortgageability and insurance costs. See our full EWS1 and high-rise guide.
- Unexpired lease term
- How many years remain on a leasehold property's lease. Most lenders require a minimum remaining term both at the point of application (typically 70–85+ years) and after your mortgage term ends (commonly 30–40 years). See our short lease mortgage guide for what this means in practice.
- Loan-to-value (LTV)
- The size of your mortgage as a percentage of the property's value. A £270,000 mortgage on a £300,000 property is 90% LTV. Lower LTV (bigger deposit) generally unlocks better interest rates and, on some property types, access to lenders who won't offer higher LTVs at all.
- Stress test
- Lenders check you could still afford repayments if interest rates rose by a set margin above your actual offered rate, not just at today's rate. This is a regulatory requirement (FCA MCOB rules) and is a major factor in how your maximum mortgage is actually calculated.
- Right to Manage (RTM)
- A legal right allowing leaseholders to take over management of their building from the freeholder/managing agent, without needing to prove mismanagement. Relevant if you're considering a flat where leaseholders are unhappy with current management.
- Mortgage in Principle (MIP / AIP)
- A lender's initial indication of how much they'd lend you, based on a soft credit check — not a guarantee, but usually required before an estate agent will take your offer seriously. Also called an Agreement in Principle (AIP). Typically valid for 60–90 days, so timing matters if your search takes a while.
- Credit file
- The record UK credit reference agencies (Experian, Equifax, TransUnion) hold on your borrowing and repayment history. Lenders use it to decide not just whether to approve you, but which income multiple tier to offer — worth checking your own file before applying, since the three agencies don't always hold identical information. Checkmyfile combines all three into one report.
- Whole-of-market broker
- A mortgage broker who can access products from the full range of UK lenders, rather than being tied to one bank's own products. The distinction matters most for non-standard cases — short leases, ex-local-authority flats, high income multiples — where a tied broker simply can't offer what a whole-of-market one can.
- Exchange of contracts
- The point a property sale becomes legally binding on both sides. A deposit (commonly 10%, though negotiable) is paid and a completion date is fixed. Before exchange, either side can generally withdraw without formal penalty — after it, walking away has real financial consequences.
- Completion
- Moving day — the remaining balance transfers, ownership legally passes to you, and you get the keys. Can happen the same day as exchange or weeks later, depending on what both parties agree. You're responsible for buildings insurance from exchange, not completion.
- Gazumping
- When a seller accepts a higher offer from someone else after already accepting yours, but before contracts are exchanged. Legal in England and Wales (though generally considered poor form), and cannot be fully prevented — moving quickly to exchange is the main protection. Does not apply in Scotland, where an accepted verbal offer is generally binding.
- Gazundering
- The buyer's equivalent of gazumping — lowering your offer shortly before exchange, when the seller has little practical choice but to accept or restart the process. Legal but widely viewed as an aggressive negotiating tactic rather than standard practice.
- Freehold vs leasehold
- Freehold means you own the building and the land it sits on outright, with no lease to run down or ground rent to pay. Leasehold means you own the property for a fixed number of years under a lease from the freeholder — common for flats, and increasingly rare for new-build houses following 2022 reforms restricting leasehold house sales.
- Lifetime ISA (LISA)
- A savings account for first-time buyers (or retirement) where the government adds a 25% bonus on contributions up to £4,000/year. Must be held 12 months before penalty-free use toward a first home costing £450,000 or less. Non-qualifying withdrawals face a 25% charge — applied to your whole withdrawal, not just the bonus, which can leave you with less than you paid in.
- Comfort buffer / safety margin
- A voluntary reduction applied to your maximum affordability figure, to leave room for costs a Mortgage in Principle doesn't fully account for — full underwriting, exact fees, or a change in circumstances. Not a lender requirement, but a deliberate cushion against offering at your absolute ceiling.
- Price-to-rent ratio
- A property's price divided by its annual rent for a comparable home. Below ~20 generally favours buying; above ~25 tends to favour renting, as a rough screening tool — most UK cities sit somewhere between the two, which is why a fuller rent-vs-buy comparison usually tells you more than this ratio alone.