Leasehold means you own your home for a fixed number of years, but you do not own the land or the building it sits in. Someone else, the freeholder, owns that. You hold a long legal contract called a lease that sets out what you can do, what you pay, and how long your ownership lasts. Most flats in England and Wales are leasehold.
If you have just bought a flat, are thinking about buying one, or have been hit with a letter or a bill you do not understand, this guide explains the whole system from the ground up. No legalese, and every term explained as we go.
Key takeaways
- You own the property for the length of the lease, not forever, and not the land underneath it.
- You will usually pay a service charge, and sometimes ground rent, to the freeholder or a managing agent.
- As the lease gets shorter the property becomes worth less and harder to sell or mortgage, especially once it drops below 80 years.
- You have legal rights to extend your lease, challenge unfair charges, take over the management, and in many cases buy the freehold.
- The law is changing. Some reforms are already in force, and bigger ones have been announced but are not law yet.
What does leasehold actually mean?
When you buy a leasehold property, you are really buying the right to live in it for a set period, the length of the lease. That might be 99 years, 125 years, or even 999 years, depending on what was originally granted.
The land and the building are owned by someone else. That person or company is the freeholder, sometimes called the landlord. Your relationship with them is governed by the lease, a long legally binding document that sets out the rules: how long you have, what you pay, what you are allowed to do, and what the freeholder is responsible for.
Think of it this way. With a freehold property you own the bricks and the land for good. With leasehold you own a long, expensive tenancy. You can sell it, mortgage it, decorate it and live in it, but there is a clock ticking, and there are rules set by someone else. This is why most flats are leasehold. When several homes share one building, someone has to be responsible for the roof, the shared hallways, the structure and the insurance, and leasehold is the traditional way England and Wales has handled that. For a fuller comparison, see our guide on leasehold versus freehold.
How does a lease work?
The lease is the single most important document you own as a leaseholder, and it is worth getting a copy and actually reading it. Your lease will usually set out the term, which is how many years it was granted for and when it started; the ground rent, if any; the service charges; your responsibilities, such as keeping the inside of your flat in good order and often needing permission to sublet, keep pets or make alterations; and the freeholder’s responsibilities, usually maintaining the structure, the roof and the common parts.
One thing catches people out. The lease binds whoever owns the property, so when you buy a leasehold flat you take on every term in that lease whether you have read it or not. That is why your solicitor’s review of the lease matters so much when you buy, something we cover in what to check before buying a leasehold flat.
What is ground rent?
Ground rent is a payment you make to the freeholder simply for occupying the land. You get nothing tangible in return. Historically it was a token “peppercorn” amount, but some more recent leases built in ground rents that started high or doubled every ten years, which caused real problems for owners trying to sell or remortgage.
The law has changed here. The Leasehold Reform (Ground Rent) Act 2022 banned ground rent on most new residential leases granted from 30 June 2022, so these are now a peppercorn, meaning effectively nothing. If your lease was granted before then, you may still pay ground rent. The government has announced plans to cap ground rents for existing leaseholders, but that cap is not yet law. Our full guide on ground rent explains where you stand depending on when your lease was granted.
What are service charges?
Service charges are your share of the cost of running and maintaining the building. They typically cover buildings insurance, cleaning and lighting the shared areas, maintaining lifts and gardens, repairs to the structure and roof, bigger projects such as replacing a roof, and the managing agent’s fees.
This is where most leasehold disputes begin. Charges can rise sharply, the breakdown is not always clear, and major works bills can run into tens of thousands of pounds per flat. The good news is that you have real rights. The charges have to be reasonable, you are entitled to see how the money is spent, and you can challenge charges you believe are unfair at the First-tier Tribunal. Where a freeholder wants to carry out works above a certain cost, they must formally consult you first, through what is called a Section 20 consultation, and skipping it limits how much they can recover from you. We walk through all of this in service charges explained.
Why does the length of the lease matter?
This is the part that costs people the most money when they do not understand it. A lease is a wasting asset. Every year it gets one year shorter, and as it shortens the property becomes worth less. For a long time, anything well over 90 or 100 years, this barely matters. But as the lease drops, two things happen.
First, once it falls below 80 years the cost of extending jumps, because of an extra cost called marriage value that applies below that threshold. Second, below around 70 to 80 years many mortgage lenders get nervous and will not lend, which shrinks your pool of buyers and can make the flat hard to sell at all.
The practical lesson is simple. If your lease is approaching 85 years, start thinking about extending it before it reaches 80. Crossing that line can add thousands to the cost, and many people only discover this when they try to sell and a buyer’s solicitor flags it, by which point they are negotiating under pressure. Our guide to lease extensions explains the process, the costs and the timing in full.
What rights do you have as a leaseholder?
This is the part many leaseholders do not realise gives them so much power. You have several statutory rights, meaning rights guaranteed by law.
You have the right to extend your lease. Most leaseholders can extend by a substantial term, and since January 2025 you no longer have to have owned the property for two years first, as that old waiting rule was abolished. You may also have the right to buy the freehold. If you own a leasehold house you may be able to buy it outright, and if you are in a block of flats the leaseholders can club together to buy the freehold collectively, which is called collective enfranchisement. You also have the right to take over the management of your building from the freeholder, without buying the freehold and without proving the freeholder has done anything wrong, which is called Right to Manage. On top of that you can challenge unreasonable service charges at the tribunal, and you are entitled to see how your service charge is spent.
These rights exist whether or not your freeholder is cooperative. Understanding them is what turns a frustrated leaseholder into one who is in control.
How is leasehold changing?
Leasehold is in the middle of the biggest shake-up in decades, and there is a lot of confusion online because the law has moved in stages. Here is where things actually stand.
Already in force: ground rent has been banned on most new leases since June 2022, and since 31 January 2025 the old rule requiring two years of ownership before you can extend your lease or buy your freehold has gone.
Passed but not yet in force: the Leasehold and Freehold Reform Act 2024 became law in 2024, but most of its headline measures still need further regulations before they take effect, and many have not yet. As things stand, marriage value has not been abolished, so it still applies to leases under 80 years, and the move to longer standard lease extension terms is not yet in force either.
Coming next: in early 2026 the government published a draft Commonhold and Leasehold Reform Bill and confirmed it would take this forward. The proposals include banning most new leasehold flats, making commonhold the default for new flats, and capping existing ground rents. The direction of travel is clearly towards making leasehold cheaper and fairer and eventually phasing it out for new flats, but much of it is not law yet, and timelines have repeatedly slipped. If you are making a decision now, do not assume the cheaper future rules will be in place in time. Our leasehold reform guide tracks exactly what is in force and what is not, and we keep it updated.
Does leasehold apply across the whole UK?
Leasehold as described here applies to England and Wales. Scotland abolished most residential leasehold long ago and uses a different system. Northern Ireland has leasehold but with some differences. This site focuses on England and Wales, where the vast majority of UK leasehold properties are.
Frequently asked questions
Is leasehold the same as renting?
No. Renting is a short-term arrangement where you pay a landlord to live somewhere and own nothing. Leasehold means you own the property, so you can sell it, mortgage it and pass it on, but for a fixed period and subject to the terms of your lease.
Do I own my flat if it is leasehold?
Yes, you own the flat for the length of the lease. What you do not own is the land and the building structure, which belong to the freeholder. You own a long-term, sellable interest in the property, not the ground it stands on.
What happens when a lease runs out?
In theory ownership returns to the freeholder, but in practice this almost never happens, because leaseholders have the legal right to extend long before that point. The real risk is not the lease running out, it is the lease getting short enough, below 80 years, to become expensive to extend and hard to sell.
Should I buy a leasehold flat?
Millions of people own leasehold flats perfectly happily, since it is the normal way of owning a flat in England and Wales. The key is to go in informed: check the lease length, understand the service charges and any ground rent, and have a good solicitor review the lease before you commit. See what to check before buying a leasehold flat.
What to do next
If you are trying to get to grips with your own situation, here is a sensible order to work through. Find your lease and check how many years are left, because that single number drives most of the decisions you will face. Work out what you pay in ground rent and service charges, and whether it seems reasonable. If your lease is heading towards 85 years, read our lease extension guide and start planning. If your charges seem unfair or unclear, read how to challenge a service charge. And if you and your neighbours are frustrated with the management, look at Right to Manage.
Whatever brought you here, the leasehold system is far more navigable once you understand the basic structure, and you now do.
This guide provides general information about leasehold property in England and Wales. It is not legal advice, and every situation is different. For advice on your own circumstances, consult a qualified solicitor or a specialist such as the Leasehold Advisory Service (LEASE). Sources: Leasehold and Freehold Reform Act 2024 and Leasehold Reform (Ground Rent) Act 2022 (legislation.gov.uk); GOV.UK leasehold guidance; House of Commons Library briefings on leasehold reform. Last reviewed [date]; reviewed whenever the law changes.