If you're buying a flat in the UK, the almost certain answer to "freehold or leasehold?" is leasehold. If you're buying a house, it's almost certainly freehold — with some important exceptions. Understanding what these terms mean, what they cost you, and how the law has recently changed is essential before you sign anything.
Leasehold tenure has been one of the most contentious issues in UK property law for the last decade. A series of scandals — ground rents doubling every 10 years, developers selling freeholds to investment companies, extortionate service charges — led to significant legal reform. The Leasehold and Freehold Reform Act 2024 changed the landscape materially. Here's what buyers need to know in 2026.
What is freehold?
Freehold ownership means you own the property and the land it sits on, outright and indefinitely. There's no expiry date on your ownership, no landlord, and typically no ongoing ground rent or service charge obligations (unless there's a management company for an estate or block). Most houses in England and Wales are sold freehold.
Freehold is the simpler, more complete form of ownership. If you can buy freehold, do.
What is leasehold?
Leasehold means you purchase the right to occupy a property for a fixed term — defined by the lease — after which ownership of the property reverts to the freeholder. In practice, leases are long (typically 99, 125, or 999 years at grant), and leaseholders can extend their leases under statutory rights long before they expire.
The freeholder (also called the landlord) owns the land and, for flats, the structure of the building. They are responsible for maintaining the common parts and the building fabric — and they charge leaseholders for this via service charges.
- Own the property and land indefinitely
- No ground rent
- No ongoing service charge (unless estate charge)
- No lease to extend
- Full control over the property (subject to planning)
- Simpler to sell — no lease complications
- Almost always: houses
- Own the right to occupy for a fixed term
- Ground rent (but abolished on new leases since 2022)
- Annual service charge for building maintenance
- May need to extend lease (adds cost)
- Restrictions on alterations, subletting, pets
- Freeholder/managing agent relationship to manage
- Almost always: flats; sometimes new-build houses
Why are flats leasehold?
Flats are almost always leasehold in England and Wales because freehold ownership of part of a building creates unanswerable legal questions: who owns the roof? Who is responsible for the foundations? What happens when the external walls need repair? Leasehold resolves these questions by giving a single entity (the freeholder) responsibility for the building's structure and common parts, with leaseholders contributing via service charges.
The alternative — commonhold — allows leaseholders to own their flats as freeholds while collectively owning and managing the building through a commonhold association. Commonhold has existed in law since 2002 but has been used for barely a handful of buildings in England and Wales. The 2024 reforms aim to make it more accessible, but it remains rare.
Service charges: what to check
Service charges are annual fees covering the cost of maintaining the building's shared areas. They typically cover: buildings insurance; cleaning of communal areas; gardening; lift maintenance; management company fees; and contributions to a sinking fund for major works.
Service charges are not capped in the UK, and they can increase substantially — particularly in older buildings where major works (roof replacement, external decoration, lift refurbishment) fall due. A service charge of £2,000–£4,000 per year is common for a flat in a managed block. In prime London developments, charges can exceed £20,000 per year.
Before making an offer on a leasehold flat, request:
- The last three years of service charge accounts and budgets
- The current year's service charge demand
- Any section 20 notices — these are advance warnings from the freeholder that major works are planned, which leaseholders will be charged for
- Details of any ongoing disputes between leaseholders and the freeholder or managing agent
- The sinking fund balance — how much has been set aside for future major works
A section 20 notice for, say, a £150,000 roof replacement split across 20 flats means a £7,500 liability per flat — in addition to normal service charges. This can arrive with limited notice and must be paid. Check the building's condition carefully before committing.
Ground rent: the position after the 2022 Act
Ground rent is an annual payment from the leaseholder to the freeholder, typically a nominal amount — often £50–£250 per year on older leases. Ground rent became extremely controversial when developers began selling new-build leasehold houses with ground rents that doubled every 10 or 25 years — resulting in charges that became enormous within decades and made properties unmortgageable and unsaleable.
The Leasehold Reform (Ground Rent) Act 2022 abolished ground rent on new leases granted after 30 June 2022, fixing it at a "peppercorn" (effectively zero). This applies to new residential leases in England and Wales. Existing leases with ground rent provisions are unaffected by the 2022 Act — but the 2024 Act included provisions to cap historical ground rents.
When buying a leasehold property, check the ground rent provisions in the existing lease. Ground rent that is more than £250 per year (or £1,000 in Greater London) may cause the lease to be treated as an "assured tenancy" — which creates significant problems for mortgage lenders. Any ground rent with doubling clauses should be flagged to your solicitor as a priority.
The 80-year rule: why lease length matters so much
This is the most important number in leasehold property. When a lease has fewer than 80 years remaining, extending it becomes significantly more expensive — because the freeholder becomes entitled to a share of "marriage value": the increase in the property's value that results from the lease being extended.
Below 70 years, many mortgage lenders will refuse to lend against the property at all. Below 60 years, the property becomes extremely difficult to sell to any buyer using a mortgage.
The key practical point: always check the unexpired lease term before making an offer. The lease term is stated in the title register, which you can download for £3 from the HMLR portal. If it's below 85 years, factor the cost of extension into your offer.
How to estimate the cost of a lease extension
Lease extension costs under the statutory route (Leasehold Reform, Housing and Urban Development Act 1993) are determined by a formula based on the property value, current lease term, ground rent, and yield. As a rough rule of thumb:
- 80–90 years remaining: extension cost approximately 1–3% of property value
- 70–80 years remaining: extension cost approximately 3–7% of property value
- 60–70 years remaining: extension cost approximately 7–15% of property value
- Below 60 years: costs escalate rapidly and become very unpredictable
You'll also pay your own solicitor's and surveyor's costs, plus a contribution to the freeholder's costs — typically another £2,000–£5,000 in total fees. Use a specialist leasehold surveyor to get an estimate before you exchange.
What the Leasehold and Freehold Reform Act 2024 changed
The Leasehold and Freehold Reform Act 2024 received Royal Assent in May 2024 and represents the most significant reform to leasehold law in England and Wales in decades. Key changes include:
- Extended lease extension term. The statutory lease extension is now 990 years (up from 90 years added to the existing term). This means a single extension should last far longer than any buyer's lifetime.
- Abolition of marriage value. Freeholders can no longer claim a share of marriage value in the premium calculation for leases below 80 years. This reduces extension costs for short leases substantially.
- No two-year wait. Previously, a leaseholder had to have owned the property for at least two years before exercising statutory rights to extend or buy the freehold. This requirement is abolished — you can exercise statutory rights on the day you complete.
- Service charge transparency. Freeholders and managing agents must provide standardised accounts and justify charges more clearly.
- Improved right to manage. Leaseholders can more easily take over management of their building without having to prove mismanagement by the freeholder.
Should you buy a leasehold flat?
Leasehold is not inherently bad — it's the tenure of the majority of UK flats and has worked perfectly well for millions of buyers. The problems arise when the specific terms of a lease are bad, when the freeholder or managing agent is unresponsive or extractive, or when the lease term is getting dangerously short.
Before buying any leasehold property, have your solicitor review the full lease document — not just the title register, which is a summary. A specialist leasehold solicitor will check: the lease term and extension options; the ground rent provisions and any doubling clauses; the service charge mechanism and any restrictions on challenge; the repair and maintenance obligations; restrictions on subletting and alterations; and the process for extending or buying the freehold.
OfferHound identifies leasehold properties and flags the key due diligence questions — lease term, known service charge history, and any specific risks — in every property report. For leasehold flat buyers specifically, see our dedicated leasehold buyer guide. Get the analysis for any UK listing — £9.99 →
Leasehold houses: a declining and controversial tenure
In recent years, developers sold new-build houses on leasehold terms — ostensibly to retain estate management control but in practice to generate income from ground rents and sell the freehold to third-party investors. This practice attracted significant regulatory and political attention and became much rarer after 2019 when major lenders began refusing to mortgage new-build leasehold houses.
If you're buying a leasehold house, the same principles apply as for flats — but you're also entitled under the Leasehold Reform Act 1967 to enfranchise (purchase the freehold). The 2024 Act made this somewhat easier. If you're buying a leasehold house, your solicitor should immediately advise on the route to freehold acquisition.
Frequently asked questions
What is the difference between leasehold and freehold?
Freehold means you own the property and land outright and indefinitely. Leasehold means you own the right to occupy for a fixed term — after which ownership reverts to the freeholder, though in practice leases are extended long before they expire. Most UK flats are leasehold; most houses are freehold.
What is the 80-year rule for leasehold?
When a lease has fewer than 80 years remaining, extending it becomes more expensive because the freeholder was previously entitled to a share of "marriage value." The 2024 Act abolished marriage value for statutory extensions, which reduces costs for short-lease properties — but the 80-year threshold remains a psychological barrier for mortgage lenders and buyers. Always check the lease term before offering.
Are service charges capped?
No — service charges are not capped in the UK, though leaseholders have the right to challenge unreasonable charges at the First-tier Tribunal (Property Chamber). The 2024 Act introduced new transparency requirements but not a cap. Always request 3 years of service charge accounts and ask about any planned major works before making an offer.
Can I extend my lease straight away after buying?
Yes — under the Leasehold and Freehold Reform Act 2024, the previous requirement to own the property for two years before exercising statutory lease extension rights has been abolished. You can serve a notice to extend from the day you complete. In practice, it's still worth completing first before serving a notice, and the process takes several months.
Is it safe to buy a flat with 70 years left on the lease?
It's possible but comes with complications. Many mortgage lenders require at least 70–85 years remaining (check your lender's specific policy). The extension cost will be significant — budget 5–12% of property value plus fees as a rough guide. If you proceed, the price you pay for the flat should be discounted to reflect the imminent cost of extension, and you should extend as soon as possible after purchase.