Leasehold vs Freehold in 2026: What Changed and What Hasn't

Freehold means you own the property and the land it sits on, indefinitely. Leasehold means you own the right to occupy the property for a fixed period (the 'lease'), but the land belongs to someone else (the 'freeholder'). When the lease expires, ownership reverts to the freeholder. Most houses in England and Wales are freehold. Most flats are leasehold — this is because multiple properties share common land and structure, and someone needs to manage (and pay for) the shared parts.

The Leasehold and Freehold Reform Act 2024 made several significant changes: it banned ground rent on new leases (ground rent must now be set at zero, a 'peppercorn'), it simplified the lease extension process, it increased the standard lease extension term to 990 years (from 90 years for flats and 50 for houses), and it removed the 'marriage value' that freeholders could charge when extending short leases. However — and this is critical — many of these provisions require secondary legislation (Statutory Instruments) to come into force. As of March 2026, the peppercorn ground rent for new leases is in effect, but the lease extension reforms are still being implemented. The timeline for full implementation has been delayed multiple times.

Existing leases with ground rent clauses remain in force. If you buy a leasehold flat with a ground rent that doubles every 10 years, you inherit that obligation — the 2024 Act only eliminated ground rent on new leases, not existing ones. Service charges remain largely unregulated — freeholders can charge what they claim is 'reasonable', and challenging unreasonable charges requires a tribunal application (£300-£500 to apply, months to resolve). Permission fees for alterations, subletting, or remortgaging still apply on many leases. These can be £100-£500 per application. Building insurance procurement remains with the freeholder, who may not shop around for competitive quotes.

Five critical checks: 1) Lease length — below 80 years, the cost of extension rises sharply (marriage value may still apply depending on reform implementation). Below 70 years, some mortgage lenders refuse to lend. 2) Ground rent — is it fixed, increasing, or doubling? Doubling ground rent can make a property effectively unsaleable within 20-30 years. 3) Service charge history — ask for 3 years of accounts and the current year's budget. Look for sudden increases and 'major works' contributions. 4) Sinking fund — is there a reserve fund for major repairs? If not, expect irregular large bills. 5) Management company — who manages the building? Are residents involved? Resident-managed buildings tend to have lower, more transparent charges.

Not all leasehold is problematic. A flat with a 999-year lease, zero ground rent, reasonable service charges, and a well-managed building is functionally equivalent to freehold. The concerns arise with: short leases (under 90 years), escalating ground rent, absent or unresponsive freeholders, and poorly maintained buildings. If the numbers work and the lease terms are reasonable, leasehold should not be a deal-breaker — it is the standard tenure for flats in England and Wales, and most leasehold properties are perfectly acceptable purchases.