Around 5 million homes in England and Wales are leasehold, and for most of those owners, the arrangement comes with costs and restrictions that freeholders never think about. That figure alone tells you this isn’t a niche issue — it affects millions of people, many of whom only realise the downsides after they’ve already exchanged contracts.
I’ve been writing about UK property for long enough to notice a pattern: buyers often treat the freehold vs leasehold question as a minor detail, something the solicitor will sort out. But the difference in what you actually own — and what you’re on the hook for — is enormous. The 2026 Leasehold and Freehold Reform Act changes a lot of the old rules, and if you’re buying soon, you need to know what’s actually different now. Here’s what you actually need to know.
What freehold and leasehold actually mean in 2026
The most important thing to understand is what you’re buying. A freehold means you own the building and the land it sits on, outright and indefinitely. A leasehold means you own the right to live in the property for a fixed number of years, as set out in the lease. You don’t own the land, and you have to follow rules set by the freeholder.
That distinction matters more than most buyers realise. With a freehold, you’re responsible for everything — repairs, insurance, maintenance — but you also answer to nobody. With a leasehold, you share those costs through service charges, but you also need permission for things like structural changes or even keeping a pet, depending on the lease. What I’d tell anyone starting their search is this: don’t dismiss leasehold flats outright, but do check the lease length and the service charge history before you get emotionally attached.
Why the 2026 reforms change the calculation for buyers
The reforms that came into force from 2024 through 2026 have shifted the balance significantly. The most practical change is the abolition of the two-year ownership rule. Previously, you had to own a leasehold property for two years before you could demand a lease extension or buy the freehold. That rule is gone. You can now act from the day you complete the purchase.
That matters if you’re buying a flat with a short lease — say, under 80 years. Under the old rules, you’d be stuck waiting two years while the lease kept ticking down and the cost to extend kept rising. Now you can extend immediately. And when you do, the ground rent drops to a peppercorn — effectively zero — under the statutory route. That’s a significant saving over the life of the lease.
There’s also a change that affects thousands of flat owners in mixed-use buildings. Previously, if a building had more than 25% non-residential space — shops or offices on the ground floor, for example — leaseholders were blocked from buying the freehold or taking over management. That threshold has been raised to 50%. If you’re buying a flat above a shop, you now have a realistic path to collective ownership that simply didn’t exist before.
Where buyers still get tripped up
Even with the reforms, there are traps that catch people out. Here are the ones I see most often.
Assuming a short lease is easy to fix
Yes, you can now extend a lease from day one, and the extension goes to 990 years. But the cost still depends on the remaining term. Leases under 80 years used to attract “marriage value” — an additional cost that made extensions very expensive. The reforms aim to reduce that, but it hasn’t been eliminated entirely. If you’re looking at a flat with 70 years left, don’t assume the extension will be cheap. Get a quote from a specialist solicitor before you make an offer.
Ignoring the service charge history
The reforms have introduced standardised service charge demand forms and annual reporting requirements, which should make costs more transparent. But that doesn’t mean the charges themselves are reasonable. Ask for the last three years of service charge accounts. Look for large one-off charges, sinking fund contributions, and any history of disputes between leaseholders and the freeholder. A low ground rent is meaningless if the service charge is £4,000 a year and rising.
Overlooking the ban on new leasehold houses
If you’re buying a new-build house in 2026, it should be freehold. The ban on new leasehold houses is now in effect, with very limited exceptions for shared ownership and community land trusts. If a developer tries to sell you a new house as leasehold, that’s a red flag. Ask why it’s not freehold, and get the answer in writing. If the reason doesn’t fit one of the legal exceptions, walk away.
Thinking ground rent doesn’t matter
For existing leases, ground rent isn’t automatically zero. The peppercorn rule applies to statutory lease extensions and new leases. If you’re buying a leasehold property with an existing lease, check the ground rent clause. Some older leases have escalating ground rents that double every few years — those can make the property hard to sell or remortgage. If the ground rent is over £250 a year (or £1,000 in London), the lease may be classified as an assured tenancy, which has its own legal complications. The 2025 changes mean long leases over 21 years no longer count as assured tenancies regardless of ground rent, but the practical impact on mortgage lenders is still unclear.
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| Feature | Freehold | Leasehold (2026 rules) |
|---|---|---|
| Ownership | You own the property and land | You own the property for a fixed lease term |
| Duration | Indefinite | Fixed term, now extendable up to 990 years |
| Ground rent | None | Capped on existing leases or zero for new leases |
| Lease extensions | Not required | Statutory right to extend from day one |
| Maintenance | Sole responsibility | Shared through service charges |
How to make the right choice when buying
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The decision between freehold and leasehold isn’t just about the property itself — it’s about your financial situation, your tolerance for ongoing costs, and how long you plan to stay. Here’s how I’d approach it.
Check the lease length before you do anything else
If you’re looking at a leasehold property, the remaining lease term is the single most important number. Anything under 80 years is a problem, even with the reforms. The cost to extend will be higher, and mortgage lenders may refuse to lend. If the lease is under 70 years, get a specialist valuation before you make an offer. A property lawyer who specialises in leasehold can run the numbers and tell you what the extension will actually cost — don’t rely on the estate agent’s estimate.
Compare the total monthly cost, not just the mortgage
Freehold buyers need to budget for buildings insurance, maintenance, and repairs. Leasehold buyers pay ground rent and service charges, but the freeholder handles the building structure and common areas. Work out the total monthly housing cost for each option, including a realistic allowance for repairs. A freehold house with an old roof might cost you £8,000 in year one. A leasehold flat with a well-managed sinking fund might cost you £150 a month in service charges with no surprises. Neither is inherently better — it depends on your cash flow and risk tolerance.
Understand the Right to Manage process
If you’re buying a leasehold flat in a building where the freeholder is unresponsive or the service charges are unreasonable, the Right to Manage (RTM) process lets leaseholders take over the management. The reforms have made this easier: the non-residential threshold is now 50%, and in most cases leaseholders no longer have to pay the freeholder’s legal fees when making a claim. The process involves forming an RTM company, serving notice on the freeholder, and then taking over the management functions. It’s not quick, but it’s a genuine option if the current management is poor.
Look at commonhold as an emerging alternative
The government has indicated that commonhold could become the default ownership structure for new flats in the future. Under commonhold, you own your individual flat outright while collectively owning and managing the shared areas with other residents. There’s no lease, no ground rent, and no freeholder. It’s been available in law for years but rarely used. If you’re buying a new-build flat, ask whether it’s being sold as commonhold. If it is, you’re getting something closer to freehold ownership without the leasehold baggage.
Frequently asked questions
Can I still be refused a lease extension? ▾
Does the 990-year extension apply to houses as well as flats? ▾
What happens if my freeholder refuses to provide service charge breakdowns? ▾
Is it worth buying a leasehold flat with 85 years remaining? ▾
Can I sell a leasehold property with a short lease? ▾
Your next move
The 2026 reforms have made leasehold ownership fairer and more flexible, but they haven’t made it identical to freehold. The key is knowing which questions to ask before you commit. Check the lease length, the service charge history, and the ground rent terms. If something doesn’t add up, get specialist advice before you exchange contracts. If this was useful, you might also want to read the essential guide to buying a house in the UK.
Sources and Further Reading
Understanding ownership laws when buying a house in the UK — A deeper look at how different ownership structures affect your rights and responsibilities as a buyer.
The Leasehold & Freehold Reform Act: What 2026 buyers need to know. Gorvins Residential, 2026.
Freehold vs leasehold 2026: The new rules of ownership. Purplebricks, 2026.
Leasehold toolkit: England. HM Government, 2025.
