Around 4.98 million homes in England are leasehold — roughly one in five properties. If you are buying a flat, you are almost certainly buying a leasehold. If you are buying a house, you might be too, especially in parts of the North West where the majority of new houses sold in 2025 were leasehold. The difference between owning the building and land outright versus owning just the right to live there for a fixed term affects everything from your monthly costs to how easily you can 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.
Leasehold is the default for flats because shared buildings need a single owner for the structure and common areas. But the rules have shifted fast. The Leasehold Reform (Ground Rent) Act 2022 and the Leasehold and Freehold Reform Act 2024 have changed what new leases look like and what existing leaseholders can do. If you are buying in 2026, you need to know which rules apply to the property you are looking at, not just the general principle. UK property market conditions also affect how leasehold properties sell and what lenders will accept. Here’s what you actually need to know.
Let me be clear about the central concept here. Leasehold is not ownership in the full sense — it is a long-term rental of the building from a freeholder. You hold the property for a fixed term, and when that term ends, ownership reverts to the freeholder. In practice, leases of 125 or 999 years behave much like ownership, but the legal difference matters when you want to extend, alter, or sell.
What I tend to notice is that buyers focus on the monthly payment and forget the expiry date. A lease with 70 years left might look fine on paper, but it is already in the danger zone for lenders. Buying an apartment in the UK means understanding that the lease length is as important as the price.
What leasehold actually costs you — the full picture
The purchase price is never the whole story with leasehold. Three ongoing costs sit on top: ground rent, service charges, and — if the lease is short — extension fees. The 2022 Act set ground rent to a peppercorn (effectively zero) for most new long residential leases signed after 30 June 2022. But older leases can still have ground rent that doubles every 10 or 25 years, which can push payments well beyond what you expected.
Service charges cover the building’s insurance, cleaning of common areas, lifts, fire systems, and landscaping. They vary year to year, and major works — a new roof, for example — can run into thousands of pounds with relatively short notice. Some buildings build a sinking fund to spread those costs, but not all do.
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| Cost | Freehold | Leasehold |
|---|---|---|
| Ground rent | None | Peppercorn (new leases); variable on older leases |
| Service charges | None | Annual fee for communal maintenance, insurance, shared areas |
| Major works | Your sole responsibility | Shared via service charge or sinking fund |
| Lease extension | Not applicable | Can cost thousands; rises sharply below 80 years |
| Buildings insurance | You arrange and pay | Arranged by freeholder, charged via service charge |
Regional variation matters too. Homecost reports that while only 6.4% of house sales nationally were leasehold in 2025, in Hyndburn it was 63.4%, in Oldham 61.5%, and in Bolton 61.3%. This is a North West phenomenon linked to developers selling new houses on leases while keeping ground rent as income. If you are buying a house in those areas, do not assume it is freehold. Understanding lease agreements is essential even for houses in these regions. A small safe for storing your property documents and lease paperwork is a practical investment — the Yale Small Value Safe keeps deeds, contracts, and certificates secure and accessible.
Mistakes buyers make with leasehold
Not checking the remaining lease length early enough
Most mortgage lenders want at least 70 years left on the lease at the end of the mortgage term. If you are buying with a 25-year mortgage and the lease has 95 years left, that is fine. But at 85 years, you are already close to the boundary. Below 80 years, the lease extension premium rises sharply, and you may struggle to get a mortgage at all. Properties with leases under 80 years sell at a 5–15% discount and take longer to sell. Check the lease term before you make an offer, not after.
Ignoring ground rent escalation clauses
Older leases often contain clauses that double the ground rent every 10 or 25 years. A £100 annual ground rent today could become £200 in a decade, then £400, then £800. This is not a theoretical risk — it can make the property unsellable because lenders refuse to lend on leases with escalating ground rent. The 2022 Act stopped this for new leases, but if you are buying an existing leasehold, you inherit the terms. A real estate lawyer can review the lease and flag any escalation clauses before you exchange contracts.
Underestimating service charge volatility
Service charges can change every year. A building that looks well-managed today might have a major repair next year — a new lift, roof replacement, or cladding remediation — that costs each leaseholder several thousand pounds. The freeholder is not required to cap the charges, and you have limited ability to refuse. Check whether the building has a sinking fund and what major works are planned. Ask for the last three years of service charge accounts before you commit.
Assuming all houses are freehold
Nationally, only 6.4% of houses sold in 2025 were leasehold, but in parts of the North West the figure is over 60%. If you are buying a new-build house in Lancashire or Greater Manchester, check the tenure. Developers sometimes sell houses on leasehold to retain ground rent income. The 2024 Act restricts new leasehold houses, but existing ones remain leasehold. Do not assume — check the title register.
How to buy leasehold or freehold — the practical steps
What to check before you offer on a leasehold
Four things you need to verify before you make an offer: the remaining lease length (request a copy of the lease from the seller), the current ground rent and any escalation clause, the service charge history and planned major works, and whether the building has an EWS1 certificate for fire safety. Without an EWS1, some lenders will not lend on flats in buildings over 18 metres. Ask your solicitor to review the LPE1 form, which the seller’s management company provides — it covers all these details.
The lease extension process — how it works
If you need to extend the lease, the 2024 Act removed the two-year ownership rule, meaning you can now extend immediately after buying. The process involves serving a formal notice on the freeholder, negotiating the premium, and then completing the legal paperwork. The extension adds 990 years to the existing term for flats (replacing the previous 90-year extension) and sets ground rent to a peppercorn. The 2024 Act also abolished marriage value, which previously made extensions under 80 years much more expensive. But many provisions of the 2024 Act still require secondary legislation — check with a solicitor whether the changes are in force for your situation. A property lawyer can handle the notice and negotiation for you.
Share of freehold and commonhold — the alternatives
Share of freehold is common for flats — you own a leasehold flat plus a share in the company that owns the building’s freehold. This gives you collective control over the building, cheaper extensions (often to 999 years), and no ground rent. Commonhold is a newer structure where flat owners hold the freehold of their individual unit indefinitely and jointly manage common areas through a commonhold association. The government wants to make commonhold the default for new flats, but it is still rare. Understanding what landlords expect from tenants can also help if you are renting out a leasehold property — your lease may restrict subletting.
What the 2026 reforms mean for buyers
The Leasehold and Freehold Reform Act 2024 received Royal Assent in May 2024, but as of early 2026 many provisions still await secondary legislation. The key changes that are in effect include the abolition of the two-year ownership rule for lease extensions, the restriction on new leasehold houses, and the removal of marriage value from statutory valuations. The draft bill published in January 2026 proposes capping existing residential ground rents at £250 per year, with a transition to peppercorn after 40 years — but this is expected to take effect no earlier than late 2027. If you are buying now, work with a solicitor who specialises in leasehold reform to confirm which rules apply to your specific property.
Frequently asked questions
Can I extend my lease? ▾
What happens when a lease runs out? ▾
Is leasehold a bad thing? ▾
Can I buy the freehold of my leasehold property? ▾
What is share of freehold? ▾
Do the 2024 reforms apply to existing leases? ▾
What the shift toward commonhold means for the future
The government’s plan to make commonhold the default for new flats would fundamentally change the UK property market. Commonhold gives flat owners freehold ownership of their individual unit with no lease term, no ground rent, and collective management of common areas. It removes the landlord altogether. But it is still rare — few lenders have experience with it, and the legal framework is still being built. If you buy a new-build flat in the next few years, ask whether the developer is offering commonhold or leasehold. The difference will affect not just your costs but your control over the building for decades.
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 Downsizing delusion: why empty nesters are getting it wrong in the UK market.
Sources and Further Reading
Savvy tips for buying an apartment in the UK — Practical guidance on what to check before buying a flat, including lease length, service charges, and building management.
Decoding UK lease agreements: what tenants really need to know — A breakdown of lease terms, clauses, and what to watch for in a leasehold agreement.
Homecost (2026). Freehold vs Leasehold UK 2026. 🔗
UK Calculator (2026). Leasehold vs Freehold Guide. 🔗
IREIS (2026). UK Property Leasehold Freehold Explained. 🔗
HouseCheckup (2026). Leasehold vs Freehold — UK Property Ownership. 🔗
