Leasehold Advice
Leasehold vs Freehold (and Share of Freehold) Explained
Three forms of ownership shape every flat sale in England. This guide explains what each means in practice, how each affects your sale, and what is changing under leasehold reform in 2026.
The Short Version
If you live in a flat in England or Wales, you almost certainly own it on a lease. That lease gives you ownership of the flat for a set number of years, often 99, 125, 250 or 999, and you can live in it, let it out, sell it on or leave it in your will, subject to whatever the lease says. The freehold of the building belongs to someone else, who looks after the structure, the roof, the common parts and the insurance. In return, they charge you a service charge plus (usually) a ground rent for the privilege.
Freehold ownership is a different arrangement: the property and the land it stands on are yours outright, with no lease, no time limit and no one else with a legal interest in it. For a house this is straightforward. For a flat, true freehold is rare and usually causes more problems than it solves, which is why almost no flat in England is sold freehold.
Share of freehold is a third arrangement that sits between the two. You still have a lease, but you also own a share in the freehold of the building, usually alongside the other flat owners. It is increasingly common and, for many buyers and sellers, the most desirable of the three.
What Leasehold Actually Means
A lease is a legal document that grants you ownership of your flat for a fixed term, in return for ongoing payments to the freeholder (typically ground rent and a service charge) and an agreement to follow the rules set out in the lease itself. When that term runs out, in theory the flat reverts to the freeholder. In practice, leases on flats are normally extended long before that point, but the underlying time limit is the defining feature of leasehold.
Lease term and ground rent
The lease term is the headline number. New flats are usually granted on terms of 125, 250, 990 or 999 years. Conversions and older blocks were often granted shorter, sometimes 99 or 125 years, and the clock has been ticking ever since. Once a lease falls below about 85 years remaining, mortgage lenders start to look at it more cautiously; below 80 years, the cost of extending rises sharply because of something called marriage value. We cover this in detail on the marriage value page.
Ground rent is an annual payment from the leaseholder to the freeholder. Historically it was a token sum (a "peppercorn"), but in the 2000s and 2010s some developers used escalating ground-rent clauses that doubled every 10 or 25 years, which created leases that became hard to sell or remortgage. New residential leases granted on or after 30 June 2022 are restricted to a peppercorn by the Leasehold Reform (Ground Rent) Act 2022. Older leases keep whatever they were originally granted, unless varied or extended.
Service charge and major works
The service charge is what every leaseholder in a block pays towards running the building. It covers buildings insurance, communal lighting, cleaning, lift maintenance, gardening, managing agent fees and contributions to a reserve fund for future major works. Service charges are usually billed every six months. For a full explanation, see our page on service charges.
Major works (a new roof, a lift overhaul, redecoration of common parts) are charged separately. For any work costing each leaseholder more than £250, the freeholder has to consult under what is called a Section 20 notice. We cover this on the Section 20 page.
Freeholder and managing agent
The freeholder owns the building. They may be a property company, a charity, a local authority, an individual investor or a residents' company set up by the owners themselves. Day-to-day management is often delegated to a managing agent, a separate company hired by the freeholder to run the building. That distinction matters when something goes wrong: the managing agent answers to the freeholder, not to you. Our page on dealing with a difficult managing agent goes into what you can do.
Most of the day-to-day frustrations of leasehold (slow responses, opaque charges, expensive insurance) come from the gap between leaseholder and freeholder. The lease is the only document that defines the rules of that relationship.
What Freehold Means, and Why Almost No Flat Is Sold Freehold
Freehold ownership is what most people picture when they think of "owning your home". You own the bricks, the land, the roof and everything in between. There is no lease, no freeholder above you, no ground rent and no annual service charge dictated by someone else. You pay your mortgage, your buildings insurance, your council tax and whatever repairs come up. Beyond that, no one has a financial claim on the property.
This works perfectly well for houses. It works very badly for flats, and that is why almost no flat in England is sold freehold.
Why "flying freeholds" are rare
The problem is enforcement. Under English property law, if you own the freehold of the upper part of a building and your neighbour owns the freehold of the lower part, there is no reliable way for either of you to force the other to repair the roof, contribute to insurance or keep the shared structure sound. Such arrangements are called "flying freeholds" and lenders dislike them. Most mainstream mortgage lenders will not lend on a flat sold freehold, which makes them difficult to buy and difficult to sell.
Leasehold avoids this by putting the whole building under one freeholder, with each flat owner bound to the lease. It is not the only solution to the problem (commonhold and share of freehold both offer alternatives) but it is the one English law evolved to use.
The handful of true freehold flats
You will occasionally see a flat marketed as freehold. These tend to be either older conversions where the legal structure was never tidied up, or maisonettes with their own front door and almost no shared structure. They can usually be sold, but expect a narrower pool of buyers and lenders, and expect questions from any solicitor reviewing the title. They are the exception, not the rule.
Share of Freehold: The In-Between Option
Share of freehold sits between the two. Each flat owner still has a lease on their individual flat, but the freehold of the whole building is owned collectively by the leaseholders, usually through a small limited company that they jointly own and direct. In a four-flat conversion, that often means each owner is a 25 percent shareholder in the freehold company.
What you actually get
Two things change in practical terms. First, there is no third-party freeholder to deal with, which removes most of the friction around service charges, lease extensions and consents. The leaseholders decide for themselves what insurance to arrange, what managing agent (if any) to hire and what works to do. Second, when a lease starts to get short, the owners can simply agree to grant themselves new long leases through the freehold company, often at little or no cost. That is a significant practical advantage over standard leasehold.
The trade-offs
Share of freehold is not a free lunch. The owners are still bound to each other through their leases and through the freehold company. Decisions need a working majority. A block of four owners who all get on can run a building cheaply and well; a block where two owners are at war can become miserable. Insurance, accounts, statutory filings and managing agent appointments still need to happen, and someone has to do that work. The legal structure is also occasionally messy: not every share of freehold building is set up cleanly, and conveyancers sometimes find old paperwork that needs tidying up before a sale completes.
For most buyers, share of freehold is more attractive than standard leasehold, and it usually sells slightly faster and at a small premium. It is not the same as freehold, though, and the lease on your flat is still the document that runs the relationship.
And What About Commonhold?
There is a fourth form of ownership in English law, called commonhold. It has been on the statute book since 2002 and was designed to be the modern alternative to leasehold for blocks of flats. Each owner holds their flat outright (a "unit"), and a commonhold association made up of all the owners runs the building under a set of rules called a Commonhold Community Statement.
In principle, commonhold is closer to what most people imagine when they say they own a flat: no freeholder, no lease term, no ground rent. In practice, almost no flats in England have ever been built or converted as commonhold, partly because the original legislation had practical gaps and partly because developers preferred the income that ground rents and freehold reversions provided.
That may be about to change. Under the draft Commonhold and Leasehold Reform Bill 2026, commonhold would become the default for new flats, with a workable conversion route for existing leasehold buildings. We cover the detail (how associations work, conversion thresholds, what existing leaseholders should and should not expect) on the dedicated commonhold explained page.
How Your Tenure Affects the Sale of Your Flat
For most flat sellers, the type of tenure and (where the flat is leasehold) the remaining lease length are the two biggest factors in how the sale goes. Buyers and lenders look at the same things, in roughly the same order.
Lease length and mortgageability
Most lenders set a minimum number of years that must be left on the lease at the end of the mortgage term. The common rule of thumb is 70 to 85 years remaining at the start, depending on the lender, the deposit and the mortgage product. Below 80 years, lease extensions become significantly more expensive because of marriage value (the legal uplift the freeholder is entitled to when extending a short lease). Below 70 years, mainstream lenders mostly drop out, and the pool of buyers narrows to cash buyers and short-lease specialists. Our guides on short-lease flats and how to extend your lease cover this in detail.
Service-charge arrears and the management pack
For almost every leasehold sale, the buyer's solicitor will request a management pack from the freeholder or managing agent. This is typically an LPE1 form (Leasehold Property Enquiries) with supporting documents, though some managing agents use their own equivalent pack. It sets out the service charge accounts, the ground rent, planned major works and the building's safety information. Arrears on the seller's service charge are usually resolved on completion as part of the apportionment. Significant arrears, or unresolved disputes, can hold up the issue of the pack itself.
Ground-rent traps and onerous lease clauses
Doubling ground-rent clauses, very high initial ground rents and other onerous terms can make a flat hard to mortgage or sell at full value. Lenders look at the ground rent in three ways: as a pound amount, as a percentage of the property value and at how it escalates over time. If your lease has a problem clause, the cleanest fix is often a variation (a Deed of Variation) or a statutory lease extension, both of which reset the ground rent.
Freeholder behaviour and missing freeholders
A responsive freeholder makes a sale easier. An obstructive freeholder, or one charging high fees for routine documents, slows things down and costs money. A missing freeholder, where the owner of the freehold cannot be traced, is a particular problem because it stops things like lease extensions and consents from being granted normally; there is a court-based route to deal with it, covered on our missing freeholder page.
These issues appear most often in standard leasehold sales. Share of freehold buildings have much of the same paperwork, just with the freeholder role played by the owners themselves, which usually makes everything faster and cheaper.
What Is Changing in 2026: LAFRA, the New Bill and Commonhold on the Horizon
Leasehold reform has been moving steadily, though not always quickly, for a decade. As of May 2026 there are three live threads to keep in mind: the parts of the Leasehold and Freehold Reform Act 2024 that are already in force, the parts that are stuck pending a judicial review and the brand-new Commonhold and Leasehold Reform Bill that is now in consultation. Anyone selling now should plan around what is actually law, not around what may yet come.
LAFRA 2024: already in force
Three groups of LAFRA provisions are in force as of May 2026. First, the building safety and service-charge transparency provisions, in force from July 2024, which strengthen leaseholder protections around remediation costs and require freeholders to issue clearer service-charge information. Second, the abolition of the two-year ownership qualifying period for a statutory lease extension or for collective enfranchisement, in force from 31 January 2025; you can now start the process as soon as you complete on the purchase. Third, the relaxation of the Right to Manage qualifying rules, in force from 3 March 2025: blocks with up to 50 percent non-residential use now qualify, where the previous cap was 25 percent.
LAFRA 2024: on hold pending judicial review
The headline provisions, the abolition of marriage value, the standard 990-year lease extension at a peppercorn ground rent and the new valuation framework for premiums, are not yet in force. A coalition of freeholders has challenged the valuation reforms in court; the case is working through judicial review and remains pending. Anyone with a lease below 80 years should not rely on these reforms landing before they need to sell. Plan on the basis of the current law and treat any reform benefit as an upside.
The Commonhold and Leasehold Reform Bill 2026
In March 2026 a draft Commonhold and Leasehold Reform Bill was published, alongside a consultation that closed on 24 April 2026. It is a draft Bill, not yet law, but it sets out the direction of travel clearly. The main proposals:
- Commonhold as the default for new flats. Long residential leases above 21 years would be prohibited on new flats, with limited exemptions for shared ownership and home-finance products. A penalty regime would back this up.
- Forfeiture abolished. The current right of a freeholder to terminate a long residential lease for breach would be replaced by a statutory enforcement claim process, with proportionate remedies such as remedial orders, cost orders and orders for sale.
- Ground rents on existing leases capped, then peppercorn. An existing-lease ground rent cap of £250 a year for a 40-year transitional period, before reduction to a peppercorn. Target implementation late 2028, subject to further regulation.
- Easier conversion to commonhold. The threshold for converting an existing leasehold building drops from unanimous consent to 50 percent of qualifying leaseholders. A new "sectional" mechanism would allow different parts of a building to have different voting and cost arrangements, which helps mixed-tenure blocks.
- New commonhold governance framework. A standardised Commonhold Community Statement (the rulebook for the building), mandatory reserve funds for major works and First-tier Tribunal powers to appoint or remove directors of a commonhold association.
The provisions are future-dated, not retrospective. Existing leasehold flats stay leasehold even if they are subsequently extended or varied, unless and until they are formally converted to commonhold.
What the Bill does not cover
The new Bill is the commonhold, forfeiture and ground-rent package. It does not, on the current draft, address marriage value (still tied up in the LAFRA judicial review), further changes to the Right to Manage, fixed legal costs for enfranchisement claims or broader reform of service charges beyond what commonhold itself introduces. Some of these may follow in secondary regulation or in a separate Bill; some may not arrive before this Parliament ends. Anyone planning a sale, an extension or an enfranchisement claim in 2026 should still plan around the law as it stands today.
Further Reading
Two guides build on the basics here: how to read the lease that sets out your ownership, and who runs the building once you own a flat in it.
Frequently Asked Questions
Freehold means the property and the land it sits on are yours outright, with no time limit. Leasehold means you own your flat for a fixed number of years, set by a lease. The freehold of the building still belongs to someone else (the freeholder), and the lease sets out what you can do, what you pay and for how long. Almost every flat in England is sold on a leasehold basis because the structure of the building has to be owned and managed by one party for everyone living in it.
Not quite. With share of freehold, you still have a lease on your individual flat, but you also own a share (often through a small company) of the freehold of the whole building. In practice it gives you a vote in how the building is run and removes the third-party freeholder. The lease itself remains, which is why share of freehold flats can still have lease lengths that need looking at when you sell.
Most modern leases on new flats are granted for 125, 250, 990 or 999 years. Older flats, particularly converted Victorian houses, were often granted for 99 or 125 years, and many are now well into the second half of their term. Lease length matters when you sell: once a lease drops below about 85 years, lenders start to get cautious, and below 80 years the cost of extending rises significantly because of marriage value.
Not for existing flats. The Commonhold and Leasehold Reform Bill, published as a draft in 2026, proposes that all new flats should be sold as commonhold (a different form of ownership), banning new long residential leases above 21 years. The Bill is future-dated and not retrospective, so existing leasehold flats stay leasehold even if they are later extended or varied. Existing leaseholders also get help: ground rents are proposed to be capped and then reduced to a peppercorn, and forfeiture is proposed to be abolished.
You cannot buy the freehold of one flat in isolation, because the freehold covers the whole building. What you can do, with enough fellow leaseholders, is buy the freehold of the building together. This is called collective enfranchisement and is a statutory right where the qualifying conditions are met. Each owner keeps their flat on a lease, and the group then collectively owns the freehold (usually through a residents' company). The Leasehold and Freehold Reform Act 2024 reformed parts of this process; further reform is pending.
Commonhold is a separate form of property ownership in English law, on the statute book since 2002 but barely used in practice. Each flat (or "unit") is owned outright, with no lease term and no ground rent, and all the owners run the building together through a commonhold association governed by a Commonhold Community Statement. Where leasehold gives you a time-limited right under a freeholder, commonhold gives you perpetual ownership of your flat plus a share in how the building is run. The draft Commonhold and Leasehold Reform Bill 2026 proposes that all new flats are sold as commonhold, with a workable conversion route for existing leasehold buildings. We cover the detail on the dedicated commonhold explained page.
Under English law, freehold ownership of part of a building (the bit above someone else's flat) does not work well. There is no easy way for a freeholder of one flat to enforce repair, insurance or contribution obligations on a freeholder above or below them. Leasehold solves this by making one party (the freeholder) responsible for the whole structure, and binding every flat owner to the lease. Commonhold, introduced in 2002 but barely used, was designed as an alternative; the 2026 Bill is the renewed attempt to make it the default for new flats.