If you are buying a flat in England or Wales, you are almost certainly buying a leasehold — and the questions you ask before you offer matter more than almost anything else in the transaction. Lease length, ground rent, service charges and the freeholder's behaviour affect what you pay each month, whether a lender will touch the property, and what it will be worth when you come to sell.
Here is what the distinction actually means in 2026, and where the long-promised leasehold reforms have genuinely got to.
Own the freehold and you own the building and the land it sits on, outright and indefinitely. Own a leasehold and you own the right to occupy a property for a fixed number of years under the terms of a lease; the freeholder retains ownership of the building and, usually, responsibility for the structure and common parts. Most houses are freehold. Most flats are leasehold, because someone has to be responsible for the roof, the hallways and the buildings insurance across multiple homes.
A lease is a wasting asset. The shorter it gets, the less the flat is worth and the harder it is to mortgage — many lenders want at least 70 to 80 years remaining at the end of the mortgage term, which in practice rules out anything much under 85 years for a 25-year loan.
Under the current law, once a lease drops below 80 years, extending it becomes markedly more expensive because marriage value becomes payable — broadly, half the uplift in value that the extension creates goes to the freeholder. A flat with 82 years left and a flat with 78 years left can be separated by several thousand pounds of future cost. Always ask for the exact unexpired term, in writing, before you offer.
Ground rent is a payment to the freeholder for no service in return. For new long residential leases granted since the Leasehold Reform (Ground Rent) Act 2022 came into force, ground rent is limited to a peppercorn — effectively nil. Older leases are unaffected, and some contain doubling or RPI-linked review clauses that lenders treat as a defect. Check the review mechanism, not just the current figure.
Service charges cover buildings insurance, communal repairs, cleaning, lifts and management fees. They are not capped, but they must be reasonable and properly consulted on. Ask for the last three years of accounts, the reserve fund balance, and details of any planned major works — a £20,000 Section 20 bill for roof or cladding works landing six months after completion is a genuine risk on older blocks.
This is where a lot of misinformation circulates, so be precise about it. The Leasehold and Freehold Reform Act 2024 reached the statute book, but its headline financial measures — a standard 990-year lease extension term at a peppercorn ground rent, and the abolition of marriage value — depend on secondary legislation and a valuation framework that have not yet been brought into force.
The government has since introduced a further draft Commonhold and Leasehold Reform Bill, and the valuation rules have been the subject of both consultation and litigation. The practical position for anyone buying today is straightforward: do not price a purchase, or delay a lease extension, on the assumption that cheaper statutory terms will arrive shortly. Commentators widely expect the new valuation regime to take effect no earlier than 2027, and quite possibly later.
Commonhold allows flat owners to hold the freehold of their own unit and jointly manage the building through a commonhold association, with no lease and no ground rent. It has existed since 2002 but has barely been used. Government policy is to make commonhold the default for new flats in due course, but it is not the reality on the ground in 2026, and you will rarely encounter it in the second-hand market.
Many converted houses are sold as "share of freehold" — you own a leasehold flat and, with the other flat owners, a share of the freehold company. It usually means cheap lease extensions and control over service charges, but it also means you and your neighbours are the landlord. Check that the underlying leases are long and that the company's accounts and insurance are actually in order.
Looking at flats this autumn? Talk to Giles Real Estates before you offer, or browse property for sale to see what is currently on the market.