Updated 13 July 2026
Short Answer – Leases are not as bad as you think. Freehold land can be equally as onerous – or leasehold can be just as good. Freehold land is also conditional land. These are 6 good reasons why.
6 LEASEHOLD MYTHS BUSTED! What is a lease and how to use them
Table of Contents
6. Myth – Leases don’t include the land
If the lease (“a term of years absolute”) says the land is included (‘demised to the tenant’) – it’s included. There may even be covenants made by the tenants to put and keep the land in good condition, precisely because it is included. This is common in both commercial and residential leases and tenancies.
5. Myth – Leases must be written down in full and must be fully compliant with regulations
This isn’t true. A lease can be unwritten or partially written – the case is Walsh v Lonsdale – the test is (1) a periodic payment of rent, and (2) possession of the land. It can be very hard to evict someone from an unwritten lease, particularly commercial leases. Eviction of a business from a building tends to destroy the business, which is not in the public interest. Judges who are asked to give orders to evict businesses are usually very reluctant to do so unless the breach of the lease is very serious.
4. Myth – Leases are the same as licences
Licence just means ‘permission’ – hotel rooms, air bnb’s, or staying in hospital for example are only ‘by permission’ or by licence, even if you pay for the stay. Permission to enter is not the same as being a tenant. It can be hard to know if you have a lease or a licence – if there’s a dispute that can’t be resolved, a judge will decide (at great cost..!). There are different sets of rules to terminate leases and licences. Leases are offer much more protection to the tenant.
3. Myth – Positive covenants (e.g. the promise to pay rent) apply to only to leases.
A lease is time limited e.g. 20 years, because it is an extant contract. It’s “a live contract” and the covenants (promises to do things) can be enforced by either party. That’s why the landlord can make you pay rent, repair the building, pay insurance and pay service charge. And it’s why he can’t evict you or trespass on the property – unless he complies with the lease or you breach it.
However a covenant to do something – a promise to repair a building or a footpath or a pipe, can be enforced against someone who uses the land. If someone has a footpath across your garden, there may be an implied covenant that they must maintain the footpath and keep it in good condition.
Some freeholders [particularly on new build houses in the North West of England] actually have to pay ‘service charge’ like a leaseholder must pay rent – the landlord can collect the debt by granting a lease of the debt to a trustee e.g. someone who owns neighbouring land or has an express deed of covenant with you.
They may even be able to take back possession of your house without a court application because you have not paid your ‘service charge’ as there are powers in the LPA 1925 s121 for them to do this. There have been reforms in this area of law recently to try and stop this so it is worth taking advice if you have a problematic service charge or rent charge to sort out.
2. Myth – Only leasehold land ownership is conditional – Bona Vacantia land
It’s not just leases, freeholds are conditional too, e.g. rent charges create leases over freeholds to protect debts. If a company becomes insolvent or you die without heirs (successors) the title is cancelled and becomes “land in bona vacantia“.
You then need to transfer the title back from the Crown estate which can be lengthy and expensive. The Crown way wish to disclaim the land to avoid claims by third parties with right or liabilities against it (e.g. occupiers liability for safety, or clean up costs for contamination)
Until 1925 you could include conditions in freehold much like conditions in modern leases. This is known as settled land e.g. the house shall pass to my first born child on my death. Rent charges are part of this legacy. Today we use leases, trusts and wills to do the same thing as conditional freeholds.
1. Myth – All leases are bad and you shouldn’t own one
Theses are not bad, they just misunderstood and misused.
In fact the new Renters Rights Act 2025 has kept leases and tenancies as permitted form of legal ownership because they’re just so useful. The government chose not to ban leases because if leases didn’t exist, you’d invent them immediately to solve practical problems.
Where to live, where to work, how long to stay for and how much it costs – they’re used to protect debts, occupy land, you can lease rights like mining rights or parking rights, they work for land, cars, phones, phone lines, photocopiers and lots of other things you don’t have time to list here. They infinitely flexible but frequently misunderstood and used badly. They can be bought, sold, subleased, mortgaged and charged just like a freehold too.
Contact us for your lease queries!