Around 5 million homes in England and Wales are leasehold, and the vast majority of those are flats. That figure alone tells you how common this arrangement is, yet I still hear from buyers who only discover what leasehold really means after they’ve exchanged contracts. Over the years covering UK property, the same confusion keeps coming up: people assume owning a flat works the same as owning a house, and the differences only surface when a service charge arrives or a lease extension becomes urgent. Here’s what you actually need to know.
If you’re looking at apartments right now, the difference between leasehold and freehold isn’t just legal jargon — it affects what you pay each year, how much control you have over your home, and what happens when you want to sell. The rules have shifted significantly in the last two years, and more changes are coming. Before you make an offer, it’s worth understanding what flat ownership actually involves under the current system.
What leasehold and freehold actually mean for flat buyers
The most important thing to grasp isn’t the legal definition — it’s the consequence. With a freehold house, you own everything: bricks, roof, garden, and the ground beneath it. With a leasehold flat, you own the space inside your front door for a fixed period, while the building and land belong to a freeholder. That freeholder sets the ground rent, organises building insurance, and decides what gets spent on the communal areas. You pay a service charge for all of that, and you have limited say in how the money is used.
What I tend to notice is that buyers focus on the monthly service charge figure without checking what it covers or how it’s been calculated. A low charge might mean the freeholder isn’t setting aside money for major repairs, which can lead to a sudden large bill later. A high charge might include things like a concierge or gym you don’t use. The key is to ask for the last three years of service charge accounts and the building’s planned maintenance schedule before you commit.
Why the leasehold system affects your finances and your freedom
The practical impact of leasehold shows up in three places: your monthly costs, your ability to sell, and your control over the building. Service charges in England and Wales can be unpredictable, and many flat buyers underestimate how much those charges can rise. Ground rent has been another pain point — some older leases include clauses that double the ground rent every few years, which can make the flat unsellable. The government has proposed capping ground rent on existing leases at £250 a year, but that hasn’t become law yet.
If you’re buying a flat with a lease under 90 years, the extension cost should be part of your negotiation. The old rule required you to own the property for two years before you could extend, but that was scrapped in February 2025. You can now apply for a lease extension immediately after buying. That’s a meaningful change, but the cost still depends on the lease length, the property value, and the ground rent.
Where flat buyers get tripped up
Most of the problems I see come from assumptions that don’t hold up once the paperwork arrives. Here are the patterns that cause the most trouble.
Assuming all leaseholds are the same
Leases vary enormously. Some have ground rent that stays at a peppercorn — effectively zero — while others escalate every decade. Some service charges include a sinking fund for major repairs; others don’t. The only way to know what you’re taking on is to read the lease, or better yet, have a solicitor who specialises in leasehold property do it for you. If you need a quick legal opinion on a specific clause, a property lawyer can review the key terms before you exchange contracts.
Ignoring the lease length until it’s too late
A lease with 85 years remaining might feel fine, but it’s close to the 80-year threshold where marriage value kicks in. Once you cross that line, the cost of extending can double or triple. The table below shows how the cost changes at different lease lengths.
→ Scroll right to see all columns
| Lease remaining | Marriage value applies? | Typical extension cost impact |
|---|---|---|
| Over 80 years | No | Lower — based on ground rent and lease length only |
| Under 80 years | Yes (until reform implemented) | Higher — can add thousands to the premium |
| Under 70 years | Yes | Significantly higher — lenders may refuse mortgages |
Overlooking the freeholder’s track record
Not all freeholders manage buildings well. Some are responsive and transparent; others are slow to act on repairs and opaque about costs. You can ask the current leaseholder about their experience, check whether the building has a residents’ association, and see if the freeholder has been taken to a tribunal over service charges. A bad freeholder can make living in the flat frustrating and reduce its resale value.
Thinking ground rent doesn’t matter anymore
New leases typically have peppercorn ground rent, but older ones don’t. If you’re buying a resale flat, the ground rent terms are whatever the original lease says. Some leases include ground rent that doubles every 10 or 25 years, which can become a serious problem when you try to sell. The proposed £250 cap would help, but it’s not law yet, so don’t rely on it.
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How to approach flat ownership in 2026 and beyond
The rules are shifting, and that creates both opportunities and risks. Here’s what I’d focus on if I were buying a flat right now.
Check the lease length before you do anything else
This is the single most important number on the paperwork. If the lease has more than 90 years remaining, you have time. If it’s under 90, factor the extension cost into your offer. The new 990-year extension right will eventually make this less of a worry, but it hasn’t been implemented yet. For now, a short lease still means a discount on the purchase price and a negotiation point.
- 1Get the exact lease term from the title deedsYour solicitor will do this, but you can ask the estate agent for the lease length upfront. Don’t rely on verbal estimates — get it in writing.
- 2Request a lease extension quoteIf the lease is under 90 years, ask a solicitor or leasehold valuation specialist for an estimate of the premium. Use that figure to adjust your offer.
- 3Decide whether to extend before or after purchaseYou can now extend immediately after buying, but negotiating the extension as part of the sale can simplify things. Discuss both options with your solicitor.
Scrutinise the service charge and sinking fund
Ask for the last three years of service charge statements and the most recent set of accounts. Look for large year-on-year increases, unexpected one-off charges, and whether the building has a sinking fund for major works like roof repairs or lift replacements. If there’s no sinking fund, ask how major repairs have been funded in the past. A well-managed building will have a clear plan and a reserve that matches the building’s age and condition.
Understand the Right to Manage and what it gives you
Since March 2025, leaseholders in mixed-use buildings can take over management if the non-residential space is up to 50% of the floor area — previously it was 25%. That means more flat owners can form a company and take control of the building’s maintenance, insurance, and service charges. It’s not a small undertaking, but it gives you direct control over costs and decisions. If you’re buying into a building where the freeholder is unresponsive, this is worth discussing with neighbours early on.
Watch for the commonhold shift
The government’s draft Commonhold and Leasehold Reform Bill, published in January 2026, proposes making commonhold the default tenure for new flats. Under commonhold, you’d own your flat outright and share ownership of the building with other residents through a commonhold association. No lease, no ground rent, no freeholder. It’s not here yet, but if you’re buying a new-build flat, ask the developer whether commonhold is an option. If it is, it could save you a lot of the headaches that come with traditional leasehold.
Frequently asked questions
Can I lose my flat if the lease runs out? ▾
Does the 990-year extension apply to all flats now? ▾
What happens if my freeholder refuses to extend the lease? ▾
Is ground rent still a problem for new flats? ▾
Can I buy the freehold of my flat with other leaseholders? ▾
Sources and Further Reading
Shared ownership apartments: a first-time buyer’s route to ownership — If you’re struggling to afford a full leasehold flat, shared ownership might be a practical alternative worth exploring.
Apartment or house: the UK property ladder debate — A broader look at whether a flat or a house makes more sense for your situation, including the ownership differences.
Leasehold Reform Latest News 2026. HOA.org.uk, 2026.
Freehold vs Leasehold 2026: The New Rules of Ownership. Purplebricks, 2026.
Leasehold toolkit: England. GOV.UK, 2026.
