Freehold vs leasehold — what UK buyers need to know in 2026

UK property tenure is a mess by international standards. Most countries handle apartment ownership through condominium or strata title, where each unit is owned outright and the shared parts are co-owned. England and Wales mostly do it through leasehold, where you own a long-term tenancy and someone else (the freeholder) owns the building. The 2024 Act has started fixing this, but the reform is partial, and the difference between tenures still affects what you can buy, what it costs to own, and what it sells for later.

Freehold in plain terms

Freehold means you own the property and the land it sits on, in perpetuity. Nobody can charge you ground rent, nobody can refuse permission to extend or alter (subject to planning), and nobody else has a stake in the structure. For houses this is the default and the right answer. The only complication is when houses are sold leasehold (the so-called “leasehold house” scandal of 2010-2017, which the 2022 Act largely killed for new builds). If you're looking at a leasehold house, walk away unless the discount is significant or you can buy the freehold quickly.

Leasehold in plain terms

You buy the right to occupy a property for a fixed term, typically 99, 125, 250 or 999 years from when the lease was first granted. The freeholder owns the building and the land. You pay ground rent (now capped on new leases, but still charged on older ones) and a service charge for maintenance of shared parts. You typically need the freeholder's consent for alterations, subletting, and pets. The lease is the contract that governs all of this, and it varies wildly between blocks.

Why are blocks of flats almost always leasehold? Because someone has to be responsible for the roof, the lift, the corridors and the foundations, and English freehold law doesn't have a clean way to make multiple freeholders share that responsibility. Leasehold is the bodge that solves it. Commonhold is the alternative, and Scotland uses tenement law that works on similar collective principles.

Share of freehold

The middle ground. The leaseholders in a block jointly own the freehold (usually through a company in which each flat owns a share) and grant themselves long leases. You still technically have a lease, but the freeholder is you and your neighbours, so ground rent is nominal, service charges are at cost, and lease extensions are free other than legal fees. It's strictly better than plain leasehold. If you're comparing two equivalent flats, the share-of-freehold one is worth roughly 5-10% more.

The Leasehold and Freehold Reform Act 2024

The biggest change to leasehold law in a generation. Three pieces matter for buyers: lease extensions are now 990 years rather than 90, marriage value below 80 years has been abolished (the old cliff edge), and the cost of buying the freehold collectively (enfranchisement) has been simplified and capped. Some provisions commenced in 2024, others are being phased in through 2025-2026. Always confirm with your solicitor which sections apply at the date of your purchase.

Service charges and the sinking fund

Service charges cover communal maintenance: cleaning, lighting, insurance, lift servicing, decoration, and reserves. £1,500-£4,000 a year is normal for a flat in a low-rise block, £3,000-£8,000 for a portered or amenity-heavy building. Always ask for three years of accounts before you offer. A sudden jump from £1,800 to £3,200 usually signals a major works project (Section 20 consultation), and that bill lands on whoever owns the flat when it's billed, not whoever was there when the work was decided. The sinking fund (or reserve fund) is the long-term savings pot for big-ticket items like roof or lift replacement; a healthy one is 5-10% of recent annual service charge income, growing.

What mortgage lenders look for

Lease term remaining at the end of the mortgage (most lenders want 30-40 years left after the mortgage ends), ground rent terms (no doubling clauses, no escalators tied to RPI without caps), reasonable service charge history, and EWS1 cladding clearance for blocks built post-2000 and over 11 metres. Halifax, Nationwide and Santander all publish thresholds; your broker will check before submitting. If the lease is short or the ground rent escalates, the buyer pool collapses to cash and specialist lenders.

Check the title before you offer

The lease and the title register tell you everything. Years remaining, ground rent terms, restrictions on use, and the freeholder's identity all show up on the official copy. The £3 spend before offering is usually the best money you'll spend on a flat purchase. See our title register check page and the short lease guide for what to watch for.