Leasehold vs Freehold: Differences, Real Costs and the 2026 Rule Changes

Freehold means you own the property and the land it stands on outright, with no time limit, no ground rent and no service charges. Leasehold means you own the right to live in the property for a fixed term — typically 99 to 999 years — under a lease granted by a freeholder, who continues to own the building and the land. When the lease runs out, ownership reverts to the freeholder unless you extend it, and in the meantime you usually pay service charges and follow the rules written into the lease.

This is not a niche distinction. There are 4.83 million leasehold dwellings in England — 19% of the entire housing stock — according to MHCLG's Leasehold dwellings 2023 to 2024 release. 72% of them are flats, and London is the most leasehold-heavy region at 38% of its stock, followed by the North West at 26%. This guide explains both tenures, puts real numbers on what leasehold costs, tracks exactly which 2024 Act reforms are in force as of June 2026, and shows you how to check any property's tenure for free before you book a viewing.

What is a freehold property?

Owning the freehold means you own the bricks, the roof and the land beneath them, indefinitely. Nobody charges you ground rent, nobody approves your kitchen extension (planning permission and building regulations aside), and nobody sends you a service charge demand. The flip side is that every repair is yours: roof, damp, boiler, drains. Most houses in England and Wales are sold freehold, and it is the tenure most buyers assume they are getting.

One modern caveat that almost no comparison guide mentions: many freehold houses on new-build estates pay estate management charges for shared roads, green spaces and drainage — so-called 'fleecehold'. Government figures cited by the HomeOwners Alliance put nearly 2 million households in this position, often with uncapped charges and weaker challenge rights than leaseholders have. The draft Commonhold and Leasehold Reform Bill published in January 2026 proposes new protections, but until it passes, a freehold title on a managed estate does not mean charge-free. Ask for the estate charge schedule before you offer. You may also occasionally meet a flying freehold, where part of a freehold property sits over or under a neighbour's — it can complicate mortgages, so flag it to your solicitor early.

What is a leasehold property?

A leasehold is a long tenancy. You buy the remaining term of a lease — a contract with the freeholder that sets out exactly what you can and cannot do. A typical lease covers who repairs what, whether you can alter the property or sublet it, whether pets are allowed, and how service charges are calculated and collected. New leases are typically granted for 99 to 999 years, and the clock runs down whether or not the flat changes hands: a 99-year lease granted in 1990 has around 63 years left today.

Leasehold is now overwhelmingly a flats issue. The Leasehold and Freehold Reform Act 2024 effectively bans the sale of new leasehold houses in England and Wales other than in exceptional circumstances — completing a collapse that was already underway, with new-build leasehold houses falling from a 15% peak in 2016 to under 1% by December 2022, according to government data cited by the HomeOwners Alliance. Flats are different: in a block, someone has to own and maintain the structure and common parts, which is why 72% of England's leasehold homes are flats. You may also see share of freehold, where you still hold a lease on your individual flat but also co-own the freehold of the building, usually through a company — more on that below.

What leasehold really costs (with a worked example)

Comparison guides love pros-and-cons lists but rarely put numbers on the table. Here is where the money actually goes.

Ground rent

Ground rent is a payment to the freeholder for which you get precisely nothing in return. The Leasehold Reform (Ground Rent) Act 2022 reduced it to a peppercorn — literally zero — on most new residential leases from 30 June 2022, and from 1 April 2023 for retirement properties. Existing leases keep whatever the lease says, which is why the draft Commonhold and Leasehold Reform Bill (January 2026) proposes capping existing ground rents at £250 per year, falling to a peppercorn after 40 years of the lease, targeted for late 2027. The government estimates the cap would save some leaseholders more than £4,000 over the life of their lease.

Service charges

Service charges cover cleaning, lighting, lifts, gardening, buildings insurance, management fees and a sinking fund for big jobs. They vary enormously between buildings — a converted Victorian terrace might charge a few hundred pounds a year, a new tower with a concierge and gym several thousand — and they are the single biggest source of leasehold conflict. The Property Ombudsman received 6,649 service-charge enquiries in 2024, a 67% increase on the previous year. Transparency reforms in the 2024 Act — standardised demands and stronger rights to challenge — are still awaiting secondary legislation following the government's 2025 consultation.

One-off major works and buying costs

Service charges cover routine costs; major works — a new roof, external decoration, lift replacement, cladding remediation — are billed on top and can run into thousands per flat. Always ask whether any major works are planned or consulted on (a Section 20 notice) before you offer. Buying a leasehold is also more expensive at the conveyancing stage because your solicitor must review the lease and the management pack: the average conveyancing cost for buying a leasehold property in 2025 was £1,877.27, based on Compare My Move's survey of 50 licensed conveyancers. Our guide to conveyancing property searches covers what that fee should include.

A 10-year worked example

The table below stacks up illustrative running costs over 10 years for a £250,000 leasehold flat on an existing lease against an equivalent freehold house. The figures are assumptions for illustration — £250 a year ground rent (an older lease at the proposed cap level), £2,000 a year service charge, modest admin fees — not statistics. Plug in the real numbers from the seller's management pack when you have them.

Lease length: why 80 years is the cliff edge

The remaining lease term is the single most important number on any leasehold listing. Many mortgage lenders require at least 85 years remaining at the point of application, and some will not lend at all below 70 years, according to Uswitch's lender research (updated October 2025). Below 70 years the impact on value becomes severe, because each successive buyer finds it harder to borrow against the property.

The cliff edge sits at 80 years. Once a lease drops below 80 years remaining, marriage value applies to the cost of extending: roughly 50% of the increase in the property's value created by the extension gets added to the premium you pay the freeholder. The Leasehold and Freehold Reform Act 2024 abolishes marriage value — but that section is not yet in force as of June 2026, so the old maths still applies today. The practical rule: if a lease is at 82–83 years, act now rather than gambling on the commencement date. The Leasehold Advisory Service (LEASE) offers free advice and a lease extension calculator to estimate the premium.

Extending a lease

Under the current statutory route, flat owners can add 90 years to their lease at a peppercorn ground rent (houses get 50 years). Once the relevant sections of the 2024 Act commence, the standard statutory extension becomes 990 years at zero ground rent for both flats and houses. One reform is already live: since February 2025 you no longer need to have owned the property for two years before claiming an extension or buying the freehold — you can start the process on the day you complete.

Leasehold and Freehold Reform Act 2024: what's actually in force (June 2026 tracker)

Most articles on this topic were written before, during or just after the Leasehold and Freehold Reform Act 2024 passed in May 2024, and many still describe it as if everything took effect at once. It did not. The Act commences in pieces, and as of June 2026 the position — per the commencement regulations and House of Commons Library briefings — looks like this:

Two points worth underlining. First, forfeiture — the freeholder's power to take the entire property over unpaid debts, currently possible for sums as low as £350 — survives until the new Bill abolishes it. Second, ministers have indicated the ban on new leasehold flats (via commonhold becoming the default) is unlikely to commence this Parliament, so realistically 2028 or later. If you are buying a leasehold flat today, buy it on today's rules, not the promised ones.

Red flags to check before you buy

A lease under 80 years

Marriage value still applies until abolition commences, lender choice shrinks below 85 years, and some lenders refuse outright below 70. Price the extension into your offer or walk away.

Escalating ground rent clauses

The post-2016 'leasehold scandal' centred on clauses that doubled ground rent every 10 or 15 years, making homes effectively unsellable and unmortgageable. Read the rent review schedule in the lease itself — not the listing — and treat any doubling mechanism as a deal-breaker unless the freeholder has formally varied it.

Cladding and building safety

For flats in blocks — especially those over 11 metres — ask for the building's remediation status, whether it is enrolled in a government remediation scheme, and whether a landlord certificate and leaseholder deed of certificate exist. Unresolved cladding liability can mean five-figure major-works bills and an unsellable flat.

Fleecehold estate charges

On freehold new-build estates, check for an estate rentcharge or management company covenant. Nearly 2 million households pay these charges, often with no cap and limited rights to challenge — reform is in the draft Bill but not law yet.

Absent freeholder or poor management

An untraceable freeholder complicates extensions and insurance; a bad managing agent shows up as soaring charges and ignored repairs. Service charge disputes go to the First-tier Tribunal (Property Chamber), but prevention beats cure: read the last three years' accounts before you commit.

What to demand from the seller

• The last three years' service charge accounts and the current year's budget
• The ground rent schedule, including any review or escalation clauses
• Details of any planned or consulted major works (Section 20 notices)
• The LPE1 management pack — the standard form answering charge, insurance and dispute questions
• The building's safety and remediation status if it's a flat in a block

How to check if a property is leasehold or freehold — free, in 3 minutes

Listings get tenure wrong, sellers misremember, and 'share of freehold' gets used loosely. Check the official record yourself — it is free and takes about three minutes.

Method 1: HM Land Registry's free search

1. Go to GOV.UK and open Search for land and property information (HM Land Registry's free service).
2. Create a free account or sign in, then search the property's address.
3. The summary shows the tenure — 'Freehold' or 'Leasehold' — free of charge. If both titles appear for one address, the flat is leasehold and someone else holds the freehold of the building.
4. For the detail — the lease term, start date and the parties — download the title register for £7. For a leasehold flat, the register's A section states the lease length, which lets you calculate the years remaining yourself.

Method 2: the tenure flag in sold-price records

Here is the check nobody mentions: every sale in HM Land Registry's Price Paid data carries a freehold/leasehold flag. That means a property's sold price history reveals its tenure before you even book a viewing — and lets you see how leasehold flats in the same block or street have actually performed against freehold houses nearby. A HouseDossier report surfaces this automatically, pairing each sale with its tenure flag alongside EPC, flood, crime, subsidence, mining and planning data. If you want to run the lookup manually, our guide to finding sold house prices walks through the raw Land Registry tools.

Method 3: the paperwork

The lease itself (via the seller's solicitor or your own deeds), the listing particulars — agents must now state tenure under material information rules — and the answers in the LPE1 management pack all confirm tenure. If any of these disagree with the Land Registry record, believe the register and ask questions.

Leasehold vs freehold vs share of freehold vs commonhold

Two other terms muddy the comparison, and both matter when you're weighing up flats.

Share of freehold is the best of both for many flat buyers: lease extensions become near-free formalities and there is no third-party freeholder to argue with — but management duties (insurance, repairs, chasing non-payers) land on you and your neighbours, and a dysfunctional residents' company can be its own red flag. Commonhold was introduced in England in 2002 but uptake has been close to zero; the January 2026 draft Bill would make it the default tenure for new flats, which is why it suddenly matters for anyone weighing a new-build against an older block. And if you're wondering about a 999-year lease vs freehold: day to day they feel similar, and a 999-year lease will never hit the 80-year cliff in your lifetime, but service charges and consent requirements still apply — it is long leasehold, not ownership of the land.

Scotland and Northern Ireland: where leasehold barely exists

Everything above describes England and Wales. Residential leasehold is essentially absent in Scotland: long residential leases were converted to outright ownership, and buyers own their homes (and flats, via a shared ownership of common parts governed by the title deeds and factoring arrangements). Northern Ireland has its own ground rent regime, including rights to buy out ground rents. If you're buying north of the border, the leasehold reform debate simply is not your problem — though factoring charges on Scottish flats deserve the same scrutiny as service charges anywhere else.

So is freehold better than leasehold? The honest verdict

On control and lifetime cost, freehold wins — no ground rent, no service charge, no consent fees, no lease ticking down. But the comparison is rarely a free choice. In cities, leasehold flats are often the only realistic option at the price point, and the upfront discount is real (up to 25% cheaper than equivalent freehold flats on MoneySuperMarket's unsourced estimate). The question is not 'which tenure is better' but 'is this specific lease safe to buy' — and whether the block's prices have room to grow. Checking what leasehold flats in the building have actually sold for, and whether they've plateaued, is exactly what a ceiling price analysis tells you.

A leasehold flat is a sound buy when all of the following hold:

• 90+ years remaining on the lease (or a seller-funded extension agreed)
• Peppercorn or low fixed ground rent, with no doubling clauses
• Sane service charges with three years of published accounts and a funded reserve
• No unresolved cladding or building-safety liability
• A responsive freeholder, a residents' Right to Manage company, or share of freehold

And remember tenure is only one line on the due-diligence list. Whatever you're buying, check flood risk, the EPC rating and the rest of the public record too — our first-time buyer checks guide covers the full set in order.

Frequently asked questions