Short answer – a lease is an agreement for the tenant to own property for a fixed period of time, after which it reverts back to the original owner, or his successor. However! If you’re extending your lease, you must now also consider commonhold conversion. Full Article here
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A rather ‘Old School’ solicitor with a type writer. Conveyancing Limited has upgraded to Windows 2000, so all is well
Deep Dive
What Does “Term of Years Absolute” Actually Mean?
In simple terms, a term of years absolute is:
- A set period of time during which you (the tenant or leaseholder) have the right to live in or use a property. Mostly these rights are exclusive – but not always. You agree with the landlord whether you can shares the property with other people. Most leases are exclusive so that you do not have to . But you can lease parking rights for example, which would be shared.
- That time period must be clear and certain – for example, 6 months, 5 years, 99 years, or even 999 years.
- It can start straight away or at some point in the future.
- You don’t even need to pay rent for it to count (though most leases do have rent).
- The period can end naturally when the years run out, or earlier if there’s a break clause, if you get evicted for breaking the rules, or by giving notice (in the case of rolling tenancies like month-to-month renting).
The word “absolute” just means the time period isn’t tied to something vague or unpredictable, like “for as long as you live” or “until the war ends”. Those kinds of uncertain arrangements usually don’t count as a proper term of years absolute.
Is a “Lease” the Same Thing as a Term of Years Absolute?
Pretty much, yes – but there’s a small difference in the way lawyers think about it.
- A lease is the agreement you sign (or the deal you make) with the landlord. It’s the physical bit of paperwork with all the promises or ‘covenants’ – covenant is the lawyers word for ‘promise’.
- The term of years absolute is the entitlement that the lease gives you – i.e. the chunk of time you get to use the property.
Think of it like this: The lease is the contract.
The term of years absolute is what you actually own because of that contract. In normal conversation, most people (and even many solicitors) just say “lease” to mean both things. So when someone says “I’ve got a 125-year lease”, they are really saying “I’ve got a 125-year term of years absolute”.
How Do You Create a Proper Lease (and Therefore a Term of Years Absolute)?
The rules are quite practical:
- For longer leases (more than 3 years), you usually need a formal legal document called a deed.
- For very short lets – up to 3 years – you can often create a legal lease just by agreeing verbally or with a simple written note, as long as you’re paying a proper market rent and you can move in straight away.
If the paperwork isn’t done correctly, you might end up with an “equitable lease” instead. That still gives you rights, but it’s not quite as strong as a full legal term of years absolute. See the case of Walsh v Lonsdale – an equitable lease or an agreement for a lease is (almost) as good as a lease. In that case the agreement was partially written but still held to be a fully enforceable equitable lease.
What Makes Something a Valid Lease?
Two big things have to be true:
- Exclusive possession – You get to control the property and keep other people out(including the landlord), except when the lease allows them in (e.g. for repairs). If you’re just allowed to use a room without that control – like a hotel room or a lodger arrangement – it’s usually a licence, not a lease.
- For a lease of rights, like leasing parking rights, those rights would be exclusively yours. The landlord cannot grant a second lease over those same rights to someone else. You’d call this derogation of the lease.
- Certain length of time – The period has to be clear. “For as long as you want” or “until I feel like selling” won’t work. But “one year, then month to month until notice is given” is fine.
Why Does This Still Matter in 2026?
Even though the Law of Property Act 1925 is now over 100 years old, the term of years absolute is still the foundation of almost every rented home and many bought flats and houses in England and Wales.
The famous case of Street v Mountford separates leases from licences – we’ve written out it here. In that case Mr Street the solicitor tried to get around rent control laws by calling his lease a licence. He failed! Even though he and the occupier intended to grant a licence of a bedsit, the House of Lords ruled against him. Street was very annoyed by this as the general rule says the document is either a lease or a licence depending on your intention, but only to a reasonable degree. Apparently.
- Most private renters have an assured shorthold tenancy – which is a term of years absolute. NB – now the new Renters Rights Act has kicked in, these are gone too!
- Many flat owners have a long lease (99, 125, 999 years) – also a term of years absolute.
- Leaseholders can often extend their lease or buy the freehold thanks to laws that build on the 1925 rules. How marriage value works and why its also intended to be abolished is written about here. Marriage value is the increased value of the lease which has been extended, half of which is payable to the landlord.
Right now there’s a lot of discussion about leasehold reform, high ground rents, and making it easier to own flats outright. All of it rests on understanding what a term of years absolute is.
Quick Recap for Everyday Life
- Freehold = you own it forever – but under the condition that there is a person capable of holding the title. Or the land becomes land in bona vacantia – the title reverts back to the Crown
- Leasehold = you own it for a fixed number of years → this is the term of years absolute.
- A lease document creates the term of years absolute.
- The rules come from the Law of Property Act 1925.
- It’s the legal version of what most people just call a “lease”.
So next time you see “term of years absolute” on a legal document or in a property advert, you can smile and know it simply means: this is a leasehold property, and here’s how many years you (or the owner) get to use it.
How Many Years Should a Leasehold Have in 2026?
In 2026, a leasehold should ideally have at least 85 years remaining to be considered safe and attractive to buyers and mortgage lenders. Anything above 90–99 years is excellent. Once the term drops below 80 years, it starts to affect the property’s value and marketability. Below 70 years, many lenders become reluctant to lend, and the value can drop significantly. This is why understanding your “term of years absolute” and extending your lease early is so important.
Get in touch with your own leasehold question today >
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David Buchanan is a property litigator, conveyancer and private client lawyer with 20 years experience (or more!) in the field. He is currently a consultant solicitor for Taylor Rose.