Leasehold and freehold ownerships create very different legal positions for buyers

In 2026, the gap matters more than ever because leasehold law is quickly changing. Buyers need to pay attention to service charges, building management and lease length after years of rising costs and reform debates.

Freehold ownership usually means you own both the property and the land it stands on. Leasehold ownership means you own the property for a fixed number of years, while the freeholder owns the land and retains certain legal rights.

Flats are still commonly sold as leasehold properties, although reforms are reshaping the market.

Lease length matters

The changing laws make it particularly useful this year to consult solicitors experienced in leasehold reform. Leasehold law is nationwide, but local solicitors familiar with properties in areas with many property transactions – Cheltenham solicitors, for example – may better understand local management companies and common practices. They can advise on lease-extension rights and future liabilities.

A lease loses value as the remaining term shortens. Once a lease falls below 80 years, extending it can become much more expensive because of “marriage value”, although reforms are beginning to change this area. The Leasehold and Freehold Reform Act (LFRA) 2024 is designed to make it cheaper for leaseholders to extend their lease (or buy their freehold), but most of the Act’s provisions aren’t yet in effect.

Mortgage lenders sometimes become cautious about shorter leases. Some banks may refuse lending entirely if the lease term is too low.

Buyers sometimes focus on monthly costs and overlook lease length until late in the transaction. That can lead to renegotiations, delays or failed sales.

Service charges and management disputes

Service charges are one of the biggest concerns for leasehold buyers. Charges can cover building insurance, maintenance, repairs and managing agent fees. In some developments, costs have increased sharply over recent years.

A freeholder or management company may also demand contributions for major works. Even if the work benefits the building, the bills can be substantial.

Ground rent concerns

Some leases include doubling ground rent provisions, which have caused problems for owners trying to remortgage or sell.

Buyers should check:

• The current ground rent
• How often it increases
• Whether review clauses are linked to inflation
• Whether the lease includes administration charges for permissions or notices

A low purchase price can sometimes hide expensive long-term lease obligations.

Freehold estates – not always straightforward

Buying freehold property doesn’t always mean freedom. Many modern housing estates include estate rent charges or management fees for shared roads, lighting and green spaces.

Freehold owners can still face annual charges and legal obligations to management companies. Buyers should review transfer documents carefully to see what payments or restrictions apply.

Some freehold homes contain covenants limiting alterations, parking arrangements or business use.

What buyers should do before exchange

Leasehold buyers should read the lease carefully and review the management information pack in full. Questions should include:

• How many years remain on the lease?
• Are major works planned?
• Are there disputes involving the building?
• What are the annual service charges and ground rent?
• Who manages the building?
• Can the lease be extended easily?

Freehold buyers should still check for estate charges, restrictive covenants and shared maintenance obligations.

Property ownership law is moving through another period of reform, but many changes are still being phased in. Buyers should get professional advice to be sure about any commitment.