If you are buying a flat in England or Wales, the odds are you will be offered a leasehold, not a freehold. That is the standard arrangement for flats, but it comes with costs and restrictions that many buyers only discover after they have exchanged contracts. The ranking of ownership types puts freehold at the top, share of freehold second, commonhold third, and leasehold fourth — a clear signal that the default option for flats is also the weakest one. Understanding the difference between leasehold and freehold before you offer can save you thousands and prevent you from buying a property that is hard to sell later.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Most houses in England and Wales are sold freehold. If you see a leasehold house, that is a red flag worth investigating before you offer. For flats, the picture is different. Because you share a building structure and access, pure freehold is rare. That leaves you choosing between leasehold, share of freehold, or the still-uncommon commonhold. Each has a different balance of control, cost, and risk. Here is what you actually need to know.
The central concept here is leasehold.
What I tend to notice is that buyers focus on the flat itself and forget the lease terms. The lease is a legal document that controls what you can do, what you pay, and how long you can stay. It is worth reading before you offer, not after.
What leasehold actually costs you beyond the purchase price
The purchase price is only the start. Leasehold flats come with ongoing charges that freehold houses do not have. Ground rent and service charges are the two main ones, but the details matter more than the labels.
Ground rent on new regulated leases taken out after 30 June 2022 is effectively banned — it must be a peppercorn (nil). But if you buy an older flat, the ground rent clause could be anything. Some older leases have doubling clauses where the ground rent doubles every 10 or 25 years. A flat that looks affordable today could carry a ground rent of several hundred pounds a year within a decade. The ranking of ownership types flags this as a key risk for leasehold.
Service charges cover the building’s maintenance, insurance, and common areas. You do not control them — the freeholder or managing agent does. They can rise each year, and you have limited rights to challenge them unless they are unreasonable. The Leasehold and Freehold Reform Act 2024 introduced greater transparency requirements, but the system still puts the freeholder in charge of spending your money.
Then there are the one-off costs. Extending a lease costs legal fees, valuation fees, and a premium paid to the freeholder. Buying the freehold (enfranchisement) costs even more. What I would do is check the remaining lease term before I even view the flat. If it is below 90 years, I would ask the seller for the lease document and a recent service charge statement. If they hesitate, that is a sign something is off.
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| Ownership type | Who owns the land | Ongoing charges | Key risk |
|---|---|---|---|
| Freehold | You | None (you pay maintenance) | Rare for flats |
| Share of freehold | You and other leaseholders | Service charge; peppercorn ground rent | Requires co-operation |
| Commonhold | You (flat) + association (common parts) | Commonhold assessment | Still rare; lender inexperience |
| Leasehold | Freeholder | Ground rent + service charge | Short lease; escalating charges |
Common mistakes buyers make with leasehold flats
Ignoring the remaining lease term
This is the most expensive mistake. A flat with 70 years left on the lease might be cheaper to buy, but extending it will cost a premium plus marriage value. Some lenders will not lend on a flat with under 80 years left, which means you may struggle to sell it later. What I tend to notice is that buyers see a low price and assume it is a bargain. It is not — it is a future bill. Check the lease term before you offer. If it is below 90 years, factor in the cost of an extension.
Assuming ground rent is always small
Ground rent on older leases can be deceptive. A lease might say “ground rent doubles every 25 years”. That sounds manageable until you calculate it. A starting ground rent of £100 per year becomes £200 after 25 years, £400 after 50, and £800 after 75. If you plan to hold the flat long-term, that is a real cost. The 2022 Act stopped this for new leases, but existing ones are untouched. Always read the ground rent clause. If it has a doubling or escalating provision, ask a solicitor to explain the long-term cost.
Not checking who manages the building
Service charges are only as good as the managing agent. A poorly managed building can have high charges, poor maintenance, and disputes between leaseholders and the freeholder. Before you buy, ask for the last three years of service charge accounts. Look for large increases or one-off charges for major repairs. If the building has a sinking fund (money set aside for future repairs), that is a good sign. If it does not, you could face a large bill when the roof or lift needs replacing.
Overlooking the difference between leasehold and share of freehold
Some flats are sold as leasehold but the seller also owns a share of the freehold company. That is a different situation entirely. With share of freehold, you and the other leaseholders collectively control the building. You can extend your lease cheaply (often to 999 years) and set ground rent to a peppercorn. The trade-off is that you share responsibility for managing and insuring the building. If the other owners are difficult, it can be frustrating. But for most flat buyers, share of freehold is the best option after pure freehold.
How to choose the right ownership structure for your flat
Check the lease term first — everything else follows
The remaining lease term determines whether you can get a mortgage, how much the flat is worth, and how much it will cost to extend. If the lease has more than 90 years left, you are in a strong position. Between 80 and 90 years, you need to plan for an extension soon. Below 80 years, the cost jumps because of marriage value. The ownership ranking makes clear that leasehold is the weakest option precisely because the lease is a wasting asset. My first move would be to ask the seller for the lease document and the exact number of years remaining. Do not rely on the estate agent’s estimate.
Understand the ground rent clause
If the flat was built after June 2022, the ground rent should be a peppercorn under the Leasehold Reform (Ground Rent) Act 2022. If it is older, you need to read the clause. Look for phrases like “doubles every 10 years” or “increases in line with RPI”. A solicitor can calculate the long-term cost. If the ground rent is onerous, you may be able to negotiate a reduction with the freeholder, but that costs time and legal fees. Worth weighing against the purchase price — a flat with a low purchase price but high ground rent may not be the bargain it seems.
Decide between leasehold and share of freehold
If the flat is offered as leasehold but the seller also owns a share of the freehold, that is usually a better deal. You get the practicality of a lease for a flat with the collective control of the land. You can extend your lease cheaply and reduce ground rent to nil. The downside is that you share responsibility with other owners. If they are uncooperative, decisions about maintenance and insurance can stall. But for most buyers, the control and lower long-term costs outweigh the hassle.
What the 2024 reform means for you
The Leasehold and Freehold Reform Act 2024 introduced several changes that affect leasehold buyers. Lease extensions are now 990 years instead of the previous 90 years for flats and 50 years for houses. Marriage value has been abolished for lease extensions and enfranchisement, which reduces the cost of extending a short lease. Service charge transparency has improved, with freeholders required to provide more detailed breakdowns. The government has also stated its intention to make commonhold the default tenure for new flats over time. These changes make leasehold less risky than it was, but they do not eliminate the fundamental problem: you still do not own the land, and you still pay someone else for the privilege of living in your home.
Frequently asked questions about leasehold and freehold flats
Can I buy the freehold of my leasehold flat? ▾
What happens when a lease runs out? ▾
Is ground rent always banned on new leases? ▾
Can I sell a flat with a short lease? ▾
What is commonhold and should I consider it? ▾
Do I need a solicitor to check the lease? ▾
Leasehold is the default — but it does not have to be a trap
The government’s stated direction is to make commonhold the default for new flats, and the 2024 Act has already improved lease extension terms and transparency. But those changes take time to filter through to the market. For now, leasehold remains the standard structure for flats in England and Wales. The key is to go in with your eyes open. Check the lease term, read the ground rent clause, and understand who controls the service charges. If the numbers do not add up, walk away. There will be another flat.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Is a new-build apartment worth the premium? UK market realities revealed.
Sources and Further Reading
Decoding the UK housing market: when is the right time to buy an apartment? — Timing your purchase matters, and leasehold considerations should be part of that decision.
HouseCheckUp (2026). Leasehold vs Freehold: The 2026 ranking. 🔗
UK Government (2022). Leasehold Reform (Ground Rent) Act 2022. 🔗
UK Government (2024). Leasehold and Freehold Reform Act 2024. 🔗
