Around 1 in 3 property transactions in the UK fall through, costing buyers and sellers roughly £400 million a year in wasted fees. That figure alone tells you how much can go wrong between an offer being accepted and getting the keys. The process now takes an average of 120 days to complete — up 60% since 2007 — and much of that delay comes down to a lack of clear information early on. Understanding what you actually own, and what rights come with it, is the difference between a smooth purchase and one that collapses six weeks in.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Whether you’re buying a flat in Manchester or a house in Cornwall, the type of ownership you’re getting — leasehold, freehold, or the emerging commonhold model — dictates what you can and can’t do with the property, what you’ll pay each year, and how easy it will be to sell later. The government’s 2026 leasehold reforms are set to change some of these rules, but they’re not law yet. Here’s what you actually need to know.
What the 2026 leasehold reforms actually change
These reforms are not yet in force. They depend on the draft legislation passing through Parliament, which means the timeline could shift. But the direction is clear: the government wants to move the market away from leasehold and toward commonhold, a model where flat owners share the freehold and govern the building together. If you’re buying a new-build flat in the next few years, the ownership structure you’re offered may look very different from what’s on the market today.
What I tend to notice is that most buyers focus on the purchase price and the mortgage rate, but the ownership structure can cost you thousands over the life of the property. A lease with escalating ground rent can make it hard to remortgage or sell, even if the flat itself is in great condition.
What the full cost of ownership actually looks like
The purchase price is never the only number that matters. If you’re buying a leasehold property, the annual costs can add up in ways that aren’t obvious from the listing. Ground rent, service charges, and building insurance are all set by the freeholder, and they can rise. The proposed ground rent cap of £250 a year would help roughly 770,000 to 900,000 leaseholders who currently pay more than that, but it doesn’t touch service charges — which are often the bigger expense.
Here’s a breakdown of the typical costs you’ll face on a leasehold flat versus a freehold house. These are averages — your actual figures will depend on the property, the location, and the freeholder.
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| Cost type | Leasehold flat | Freehold house |
|---|---|---|
| Ground rent | £0–£1,000+ per year (capped at £250 under proposed reforms) | None |
| Service charges | £1,000–£3,000+ per year (set by freeholder) | None (you maintain your own property) |
| Building insurance | Often arranged by freeholder, cost passed to you | You arrange and pay directly |
| Major works (roof, lift, etc.) | Freeholder can bill you for share of costs | You pay for your own repairs |
| Lease extension | Can cost thousands; depends on lease length | Not applicable |
If you’re buying a leasehold flat, ask for the last three years of service charge statements and a copy of the lease before you make an offer. That’s the only way to see what you’re actually signing up for. A real estate lawyer can review the lease terms and flag any clauses that might cause problems later — escalating ground rent, restrictions on subletting, or obligations to pay for major works without notice.
Common mistakes buyers make with ownership rights
Assuming all flats are leasehold
Most flats in England and Wales are leasehold, but that’s changing. Under the proposed reforms, new flats will have to be sold as commonhold, where you own a share of the freehold and have a say in how the building is run. If you’re looking at a new-build development, ask whether it’s being sold as leasehold or commonhold. The difference affects your control over service charges, major works, and who makes decisions about the building.
Ignoring the lease length
A lease with fewer than 80 years remaining is a problem. Lenders are reluctant to offer mortgages on short leases, and extending one can cost thousands. The cost of a lease extension depends on the property value, the ground rent, and how many years are left. If you’re buying a flat with a short lease, factor the extension cost into your offer — or walk away. What I’d do is check the lease length before I even view the property. Estate agents have to tell you if asked.
Not checking ground rent escalation clauses
Some leases include ground rent that doubles every 10 or 20 years. A £200 ground rent today could become £1,600 in 40 years. That makes the property hard to sell or remortgage, because lenders see it as a financial risk. The proposed cap would fix this for existing leases, but it’s not law yet. If you’re buying now, get a solicitor to check the ground rent clause before you exchange contracts.
Overlooking service charge caps and major works clauses
Service charges can rise without much warning. Some leases cap annual increases, others don’t. If the freeholder decides to replace the roof or upgrade the lift, you could be billed for your share — sometimes tens of thousands of pounds. Ask your solicitor whether the lease includes a cap on service charges and what the process is for approving major works. If you’re unsure about the terms, a property law specialist can explain what you’re agreeing to.
How to check what you’re actually buying
Read the lease before you offer
The lease is a legal document that sets out your rights and obligations. It covers ground rent, service charges, lease length, what you can and can’t do with the property (subletting, pets, alterations), and what happens if you fall behind on payments. Your solicitor will review it during the conveyancing process, but you can ask for a copy earlier. If the seller or agent won’t provide it, that’s a red flag.
Understand the difference between freehold, leasehold, and commonhold
Freehold means you own the building and the land it sits on. Leasehold means you own the home for a fixed term, but someone else owns the land. Commonhold, which is rare now but set to become the standard for new flats, means you own your flat outright and share ownership of the building’s common areas with other residents. Each model comes with different costs, responsibilities, and risks. The table below shows the key differences.
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| Ownership type | What you own | Who controls the building | Typical costs |
|---|---|---|---|
| Freehold | Building and land | You | Maintenance, insurance, no ground rent |
| Leasehold | Home for a fixed term | Freeholder | Ground rent, service charges, insurance |
| Commonhold | Flat outright + share of common areas | Residents collectively | Service charges (set by residents), no ground rent |
Check the property’s EPC and any restrictions
An Energy Performance Certificate (EPC) tells you how energy-efficient the property is. From 2025, new tenancies in England and Wales require a minimum EPC rating of C. If you’re buying to let, a low rating means you’ll need to pay for upgrades before you can rent it out. Also check for restrictive covenants — clauses in the title deeds that limit what you can do, like running a business from home or extending the property.
What happens if the reforms don’t pass
The 2026 leasehold reforms are proposed, not guaranteed. If the draft Commonhold and Leasehold Reform Bill doesn’t pass through Parliament in its current form, the ground rent cap and the ban on new leasehold flats won’t happen. That means leaseholders paying high ground rent today may not get relief, and new flats will continue to be sold as leasehold. If you’re buying now, don’t assume the reforms will apply to you. Base your decision on the lease as it stands, not on what might change.
Frequently asked questions
Can I sell a leasehold flat with a short lease? ▾
Does the ground rent cap apply to me if I buy now? ▾
What’s the difference between commonhold and leasehold? ▾
Can a freeholder increase my service charge without warning? ▾
What happens if I don’t pay ground rent? ▾
Do I need a solicitor to buy a leasehold property? ▾
Why ownership structure matters more than you think
The type of ownership you choose affects not just what you pay each year, but how much control you have over your home, how easy it is to sell, and whether you can remortgage. The 2026 reforms could shift the balance toward commonhold, but they’re not law yet. If you’re buying now, the safest approach is to understand the lease you’re signing and budget for the costs it creates. A business law specialist can help if you’re dealing with complex lease terms or considering a shared ownership arrangement.
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 Steps to simplify your house purchase in the UK.
Sources and Further Reading
Mortgage approved? Don’t celebrate yet — key mistakes to avoid before closing — A practical guide to the pitfalls that can derail a purchase after mortgage approval.
Essential tips for pre-purchase agreements when buying a house — How to use pre-purchase agreements to protect your deposit and avoid disputes.
gov.uk (2025). Home buying and selling reform consultation. 🔗
Drangazhova, T. (2026). What do the new UK ground rent and leasehold reforms mean for homeowners in 2026? 🔗
