Tenure — whether a home is freehold or leasehold — changes what you own, what you pay every year, and how easy the home is to sell later. It is also the area of property law most in flux right now, so this guide is dated: it reflects the position as of mid-2026, and flags what is still changing.
The short version: freehold means you own the building and the land indefinitely; leasehold means you own the right to occupy for a fixed (long) term under a contract — the lease — with a landlord who owns the freehold. The detail is where the money is.
What freehold and leasehold actually mean
A freeholder owns the property and the land it stands on outright, with no time limit and no landlord. Most houses in England and Wales are freehold. You are responsible for all maintenance, and nobody charges you ground rent.
A leaseholder owns a lease — the exclusive right to the property for a fixed term, commonly granted at 99, 125 or 999 years — from a freeholder (or an intermediate landlord). The lease is a contract: it will oblige you to pay any ground rent and service charges, to seek consent for some alterations, and to hand the property back when the term expires (in practice, leases are extended long before that). Nearly all flats are leasehold, because English law has historically had no good way to make obligations like "maintain the shared roof" run with freehold flats — that is the problem the commonhold system is designed to solve.
You will also see "share of freehold": a flat where the leaseholders collectively own the freehold, usually through a company. You still hold a lease, but your landlord is a company you co-own — extensions become cheap and ground rent is typically nil. GOV.UK’s leasehold property pages are the official plain-English reference for how the tenure works.
Sources: GOV.UK — Leasehold property · The Leasehold Advisory Service (LEASE)
The 80-year cliff: why lease length is the first thing to check
A lease is a wasting asset — it loses value as the term runs down — and the loss is not linear. Under the current law, once a lease drops below 80 years remaining, extending it becomes significantly more expensive, because the landlord is entitled to half of the "marriage value" (the uplift in the flat’s value that the extension itself creates). Crossing from 81 to 79 years can add thousands of pounds to the cost of an extension on an ordinary flat.
Lease length also drives mortgageability. Requirements vary by lender, but many want a healthy unexpired term at purchase — often 80 years or more, and comfortably beyond the end of the mortgage term. Below roughly 70 years the pool of willing lenders shrinks fast, and short-lease flats increasingly become cash-buyer territory, priced accordingly.
Practical rule: get the exact unexpired term in writing before you offer (it is on the lease and the Land Registry title). Anywhere near 85 years or below, price in the cost and hassle of an extension — and ask your solicitor about it on day one, not week ten.
Below 80 years the freeholder is owed “marriage value”, so extending gets sharply more expensive — and many lenders hesitate. A sale takes months: 82 years today is 80 by the time you remortgage.
The key threshold is 80 years: below it, the landlord is entitled to a share of the value an extension adds (“marriage value” under current rules), so the same extension costs substantially more at 79 years than at 81.
Purely indicative — no premium estimates here, because leasehold reform (including marriage-value rules) is still in flux. Always get a specialist valuation before extending or offering.
What a lease extension actually costs: worked examples
Indicative figures for a flat worth around £250,000 once extended, with a modest £100-a-year ground rent, under the rules in force as of mid-2026. At 95 years remaining, the premium to add 90 years might be roughly £4,000–£6,000. At 85 years, £7,000–£10,000. Cross the cliff to 79 years and marriage value arrives: perhaps £13,000–£18,000. At 70 years, £25,000 or more. These are ballparks — the real number turns on the flat’s value, the ground rent schedule and current deferment rates, which is why a specialist leasehold valuer earns their fee.
Now add the costs nobody mentions: your own valuer and solicitor (typically £2,000–£3,500 together), plus — under the statutory route — the freeholder’s reasonable valuation and legal fees, often another £2,000–£3,000. So the "£8,000 premium" conversation is really a £12,000–£14,000 all-in conversation. Informal (non-statutory) deals with the freeholder can be quicker and cheaper up front, but watch the terms: a slightly cheaper extension that leaves an escalating ground rent in place is usually the worse bargain.
The Leasehold Advisory Service (lease-advice.org) — a government-funded body — publishes guidance and a lease-extension calculator that will get you to a sensible planning figure before you pay for a formal valuation.
Sources: LEASE — lease extension guidance
What this means for your offer
Lease length converts directly into negotiating arithmetic. If the flat you like has 82 years left and the identical one that sold last spring had 110, they are not the same asset: the difference is the full cost of an extension (premium plus both sides’ fees) plus the risk and hassle of the process. On the worked numbers above, that can justify £10,000–£15,000 off the asking price of an ordinary flat — presented not as a haggle but as a like-for-like adjustment.
Timing matters too. Since 31 January 2025 there is no two-year wait, so a buyer can start a statutory claim on day one of ownership — but the price you pay for the extension will reflect the lease length at the time you claim. A flat at 81 years is a genuinely urgent case: extend promptly after completion, or the 80-year cliff adds thousands while you procrastinate. Ask your solicitor to have the claim ready to serve at completion.
And if the seller says "the freeholder has quoted a cheap extension" — get it in writing, check whether it is a statutory-quality extension (long term, peppercorn rent) or an informal one with strings, and let your solicitor read it before it changes your offer by a pound.
Ground rent and service charges
Ground rent is a payment to the freeholder for which you receive nothing in return. On new residential leases granted since 30 June 2022 it has been abolished — the Leasehold Reform (Ground Rent) Act 2022 restricts it to a literal peppercorn. Existing leases keep whatever their contract says, which is why you must read it: leases with rents that double every 10 or 15 years, or that are linked to RPI, became notorious in the 2010s because aggressive escalation clauses made some flats hard to sell or mortgage. Lenders scrutinise ground rent terms closely.
Service charges pay for genuinely shared costs — buildings insurance, cleaning, lifts, the roof — and for flats they are unavoidable and often substantial. Ask for the last two or three years of service-charge accounts, the current budget, and the state of the reserve (sinking) fund. Ask specifically whether any major works are planned: under Section 20 of the Landlord and Tenant Act 1985, leaseholders must be consulted on major works, and a looming roof replacement with an empty reserve fund is effectively a hidden price increase on the flat.
Service charges: what is normal, what is a red flag
Rough calibration, because "£3,400 a year" means nothing without context. A flat in a converted Victorian house with no lift and no grounds might run £1,000–£1,800 a year. A purpose-built block with a lift, communal areas and a managing agent, commonly £2,000–£4,000. Add a concierge, gym or extensive cladding-era remediation history and £5,000+ is unexceptional in the big cities. The reported average across England and Wales has been in the low £2,000s in recent years — but averages hide the block-by-block variation that actually matters.
Remember the mortgage arithmetic: roughly speaking, every £1,000 a year of service charge absorbs the same monthly budget as around £15,000–£20,000 of mortgage borrowing at recent rates. A cheap-looking flat with a £6,000 charge is not cheap, and lenders increasingly run exactly this sum when assessing affordability.
- Red flag: reserve fund near zero in a block that is visibly ageing — the roof is coming, and so is a Section 20 bill.
- Red flag: charges rising well above inflation for several consecutive years with no corresponding works.
- Red flag: current Section 20 consultation the agent "forgot" to mention — ask in writing whether any notice has been served or is contemplated.
- Red flag: accounts that are late, unaudited or simply refused. Well-run blocks are proud of their paperwork.
- Green flag: healthy reserve fund, a resident-controlled management company, and leaseholders who answer "who manages the block?" without sighing.
Flats vs houses
For flats, leasehold (or its cousins, share of freehold and the still-rare commonhold) is the norm and not by itself a red flag — what matters is the specific lease: its length, its ground rent clause, the service charges and how well the block is managed.
A leasehold house deserves more suspicion. There is rarely a structural reason for a house to be leasehold, and the practice of selling new-build houses as leaseholds with escalating ground rents was widely criticised as unfair — the Leasehold and Freehold Reform Act 2024 includes a ban on selling most new houses as leasehold, though (as of mid-2026) that ban, like much of the Act, was still awaiting commencement. If you are looking at a leasehold house, ask why it is leasehold, what the ground rent schedule looks like, and what buying the freehold would cost.
Taller blocks: cladding, EWS1 and the Building Safety Act
If the flat is in a block over 11 metres (roughly five storeys or more), a second layer of due diligence applies. After Grenfell, thousands of blocks were found to have combustible cladding or other fire-safety defects, and the Building Safety Act 2022 created a scheme of protections: qualifying leaseholders (broadly, those whose flat was their home or one of a small number of properties on 14 February 2022) are shielded from most cladding-remediation costs, with developers and a government fund picking up much of the bill.
What this means practically: ask whether the block has known cladding or fire-safety issues, whether remediation is complete, funded or merely promised, and whether the seller can provide a Leaseholder Deed of Certificate. Many lenders also ask for an EWS1 external-wall form on taller blocks — an existing, recent EWS1 with an A1/A2/B1 rating smooths the mortgage; a B2, or no form at all on a block that needs one, can stall it.
This is one of the genuinely technical corners of buying a flat, the rules have been refined repeatedly since 2022, and the protections depend on facts about the building and the seller you cannot verify from a listing. Treat everything here as the map, and your solicitor as the guide — instruct one who handles leasehold blocks routinely.
Sources: LEASE — building safety guidance · RICS — EWS1 and external wall assessments
Where reform stands (honestly) — as of mid-2026
The Leasehold and Freehold Reform Act 2024 (LAFRA) became law in May 2024, promising among other things: 990-year lease extensions as standard, abolition of marriage value, removal of the two-year ownership requirement before extending, and a ban on new leasehold houses. But passing an Act is not the same as switching it on — most of its provisions require secondary legislation and consultations before they take effect.
What had actually changed by early 2026: the two-year ownership rule for lease extensions and freehold purchases was abolished (from 31 January 2025), so buyers no longer need to wait two years before starting a claim. The big-ticket valuation reforms — abolishing marriage value and capping ground rent in extension calculations — were not yet in force, and were the subject of consultation and legal challenges from freeholders during 2025. The government has also published proposals to revive commonhold as the default tenure for new flats, with further legislation promised.
The honest takeaway for a buyer: do not bank on reform arriving on any particular date or saving you any particular amount. If you are buying a flat with a sub-85-year lease, price the extension under today’s rules and treat any future saving as upside. This is exactly the kind of moving target to put to your solicitor — and the free, government-funded Leasehold Advisory Service tracks the current position between your reading this and instructing one.
What to check before you offer on a leasehold
Five questions cover most of the risk:
- Unexpired lease term — exact years remaining, in writing.
- Ground rent — current amount and, crucially, the review clause (fixed? doubling? RPI-linked?).
- Service charge — last two years of accounts, current budget, reserve fund balance.
- Major works — anything planned or consulted on under Section 20? Any cladding or building-safety issues in the block?
- Management — who manages the block, and do current leaseholders rate them? (Ask one in the lift.)