Leasehold, freehold and share of freehold explained
The short answer
Freehold means you own the building and the land outright. Leasehold means you own the right to live there for a fixed number of years, and someone else owns the building.
Share of freehold is a leasehold flat plus a share in the company that owns the freehold. Useful, but the lease underneath still exists and still runs down.
The number that matters most is 80 years. Below that, extending the lease costs substantially more. Most lenders want around 85 years or more remaining, so a lease in the low 80s is a problem with a deadline attached.
The three you will actually be offered
| Type | What you own | The catch |
|---|---|---|
| Freehold | The building and the land it sits on, indefinitely. | Almost always a house. You are responsible for everything, including the roof and the drains. |
| Leasehold | The right to occupy for a fixed number of years, set out in a lease. Someone else owns the building. | The term runs down. Ground rent and service charges are payable, and the lease can restrict what you do. |
| Share of freehold | A leasehold flat, plus a share in the company that owns the freehold. | Not a separate type of ownership. The lease still exists underneath and can still run short. |
The 80-year rule, and why it matters more than anything else
If a lease falls below 80 years, the cost of extending it jumps, because an additional element called marriage value becomes payable to the freeholder. Above 80 years it does not apply. Below, it can add thousands.
Separately, most mainstream lenders want a comfortable margin. A common expectation is around 85 years remaining at the point the mortgage starts, and lenders also look at how many years would be left when the mortgage ends. Below roughly 70 years you are into specialist lending, which is more expensive and narrows your pool of future buyers considerably.
So a flat with 82 years left is not a small problem. It is a problem with a deadline, and the deadline is closer than the number suggests, because the lease keeps shortening while you decide.
What has actually changed, and what has not
Leasehold reform generates a great deal of coverage, much of which describes things that are announced rather than in force. Here is the position as it stands.
In force now
- The two-year ownership rule is gone. Since 31 January 2025 you no longer have to have owned the property for two years before starting a statutory lease extension or buying the freehold. You can begin immediately on completion.
- Right to Manage is open to more buildings. Since 3 March 2025 the limit on non-residential floorspace rose from 25% to 50%, so many mixed-use blocks now qualify.
- New leases carry no real ground rent. Leases granted after 30 June 2022 must have a peppercorn ground rent, meaning effectively zero.
- Statutory extensions remain as they were: 90 additional years for a flat, 50 for a house, with ground rent reduced to a peppercorn on completion.
Announced but not in force
- Abolition of marriage value and the move to 990-year extensions. In the 2024 Act, awaiting commencement and secondary legislation.
- The ban on new leasehold houses. On the statute book, not yet commenced.
- A £250 cap on ground rent for existing leases, reducing to a peppercorn after 40 years. This appeared in a draft Bill published in January 2026 and is not law. Current indications point to 2028 at the earliest.
- Commonhold as the default for new flats, with a ban on most new leasehold flats. A draft Bill exists and the government expects to introduce it in autumn 2026, with practical effect some years after that.
The practical takeaway for a buyer today: assume current law. If reform arrives and improves your position later, that is a bonus rather than a plan.
Ground rent, and the level that causes problems
Older leases often carry modest fixed ground rents. Leases granted between roughly 2000 and 2022 are the ones to examine closely, because many contain escalation clauses, and some double at intervals.
The figure to watch is £250 a year. Above that, some lenders become uncomfortable, partly because of a technical issue about assured tenancy status. A ground rent that doubles every ten or fifteen years can also become unmortgageable long before it becomes unaffordable, which affects your ability to sell.
Service charges
Service charges are the running cost of the building, and they have risen sharply. Recent industry figures put the average for a leasehold flat in England and Wales at around £2,400 to £2,900 a year, with larger flats and buildings with lifts, concierge or communal grounds costing considerably more.
The number on the listing is a budget, not a promise. What matters more is whether a reserve fund exists, and whether major works are coming. A roof replacement or a lift refurbishment can produce a bill of several thousand pounds, and it lands on whoever owns the flat when the demand is issued, not whoever was there when the roof wore out.
Budget for it properly True cost of buying calculatorService charges and ground rent are ongoing costs, but the purchase itself has its own set of one-off costs worth knowing before you commit.
What to check before you exchange
Your conveyancer should establish all of these. Ask for them in writing rather than assuming.
- Years remaining on the lease, and whether that is above 85, between 80 and 85, or below 80. Each band means something different.
- Ground rent: the current amount, how often it reviews, and the exact escalation formula. Look specifically for doubling clauses.
- Three years of service charge accounts, the current budget, and whether other leaseholders are in arrears.
- Major works: any Section 20 consultation notices issued or expected, and whether the reserve fund would cover them. This is the single most common source of nasty surprises.
- Who the freeholder is and whether they are contactable. Absent freeholders make everything slower and more expensive.
- Building safety: for flats in blocks, the fire risk assessment, cladding status, and whether the protections under the Building Safety Act apply to you.
- Lease restrictions: subletting, pets, alterations, and what permission fees the freeholder charges.
- For share of freehold: the freehold company's accounts, whether it is up to date at Companies House, and how decisions are actually made between the owners.
If you already own and the lease is getting short
Act sooner than feels necessary. The cost rises as the term falls, sharply below 80 years, and you no longer have to wait two years after purchase before starting. A valuation from a surveyor experienced in lease extensions is the sensible first step, and the Leasehold Advisory Service offers free initial guidance.
Extending is not cheap. Alongside the premium itself you will normally pay your own solicitor and surveyor, and the freeholder's reasonable costs too. Budget for professional fees in the low thousands on top of the premium.
Scotland and Northern Ireland
Long residential leasehold in the English sense essentially does not exist in Scotland, where the feudal system was abolished in 2004 and flats are owned outright with shared responsibility for common parts. Northern Ireland has leasehold, but the reforms discussed here apply to England and Wales and do not automatically extend.