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Leasehold, Freehold, Share of Freehold and Commonhold: A Complete Guide for London Buyers in 2026

Share of Freehold

If you are buying a property in London, the type of ownership you are buying matters as much as the property itself. Most buyers understand that houses are freehold and flats are leasehold. Fewer understand what that actually means for their rights, their costs, and their options as owners.

This is a complete guide to every form of property ownership in England and Wales. What each one means, what the recent legal changes have and have not changed, and what to look for before you commit.

Freehold: The Simplest Form of Ownership

Freehold means you own the property and the land it stands on outright and permanently. There is no time limit on your ownership, no landlord above you, no ground rent, and no one making decisions about your building without your agreement. You are the absolute owner.

According to MHCLG statistics published in May 2025, there are approximately 20.53 million freehold dwellings in England. Freehold accounts for 81% of the total housing stock and is the dominant tenure for houses — around 93% of all houses are freehold.
In London, freehold houses are more common in outer boroughs. In inner London, where flats dominate the stock, freehold is rarer. When you do find a freehold house in London, you own the lot — building, garden, and land — with no ongoing obligations to any third party beyond standard local authority requirements.

For most buyers of houses, freehold requires no further analysis. You own it. That is the end of it.

Leasehold: What It Actually Means to Own a Lease

Leasehold is the standard tenure for flats in England and Wales, and it is fundamentally different from freehold. When you buy leasehold, you buy the right to occupy the property for the number of years remaining on the lease. When that term expires, legal ownership reverts to the freeholder unless the lease has been extended.

According to HM Land Registry price paid data for 2024, approximately 98% of privately owned flats sold in England are sold on a leasehold basis. London has the highest proportion of leasehold properties of any region — 38% of all dwellings, compared to a national average of 19%, primarily because more than half of London’s housing stock consists of flats.

What the lease governs

The lease is a legal document that sets out the terms of your occupation. It specifies what you can and cannot do with the property — whether you can sublet, keep pets, make alterations, or run a business from home. It sets out your obligations to maintain your flat and contribute to the costs of the building. It defines the freeholder’s obligations to maintain the shared structure and services.

Every lease is different. The quality and fairness of lease terms varies considerably between buildings, developers, and eras of construction. A specialist solicitor should review any lease carefully before you commit.

Leasehold flats

Almost all privately owned flats in London are leasehold. The freeholder — who may be an individual, a company, or a property investment fund — owns the building and the land. Leaseholders own long tenancies within it. The freeholder is responsible for the building’s external structure, roof, and shared services. Leaseholders pay service charges to fund this maintenance and ground rent (on older leases) as a condition of their tenure.

The service charge is set by the freeholder or their managing agent and covers the actual costs of running the building — buildings insurance, communal cleaning, gardening, lift maintenance, and contributions to a sinking fund for future major works. In London, the median annual service charge for leasehold flats in the owner-occupied sector was £1,920 per year in 2023/24 according to the English Housing Survey. For central London developments with concierge services and significant communal facilities, charges can run considerably higher.

Leasehold houses

Leasehold houses are less common but not rare, particularly in the North West of England. In London, approximately 4% of houses are leasehold. The existence of leasehold houses has been controversial — they carry all the obligations of leasehold without the practical justification of shared building ownership that makes leasehold flats logical.

The Leasehold and Freehold Reform Act 2024 bans the sale of new leasehold houses, though this provision has not yet come into force. Existing leasehold houses can continue to be sold. If you are buying a house and it is leasehold, this requires specific investigation — particularly around the ground rent terms, the length of the lease, and whether enfranchisement (buying the freehold) is feasible and at what cost.

Share of Freehold: The Hybrid That Gives You Control

Share of freehold is not a separate legal form of tenure — you still own your flat on a leasehold basis. What changes is who owns the freehold. In a share of freehold building, the freehold is owned collectively by the leaseholders themselves, through a company they jointly control.

In practice, the flat owners in a building collectively purchase the freehold from the original freeholder through a process called collective enfranchisement. They then become their own landlord, run through a freehold company in which each flat owner is a director or shareholder.

What share of freehold gives you

Control over the building: You and your co-freeholders collectively decide how service charges are spent, what works are carried out, which managing agent (if any) is appointed, and what the buildings insurance policy covers. There is no external landlord making these decisions.

Cheaper, simpler lease extensions: Because you co-own the freehold, extending your lease becomes a transaction with a company you are part of. Many share of freehold arrangements allow informal lease extensions at minimal cost, without needing to go through the statutory process or pay the premiums that a third-party freeholder would demand.

Stronger position for buyers and lenders: Share of freehold is generally viewed more favourably by mortgage lenders and by future buyers than standard leasehold in the same building. The absence of an external freeholder removes a known source of cost escalation and uncertainty.

What share of freehold requires of you

As a co-freeholder, you share responsibility for the building’s management with your neighbours. Decisions require agreement. Major works require collective approval and funding. The freehold company must be properly maintained — directors registered at Companies House, accounts filed, and shares transferred when flats change hands. In well-organised buildings with cooperative owners, this is manageable. In buildings with fractious relationships between owners, it can be a source of significant difficulty.

Before buying a share of freehold property, ask how the freehold company is structured, how decisions are made, and whether the company’s filings at Companies House are up to date. Your solicitor should check this as part of the conveyancing.

Share of freehold gives you the benefits of flat ownership without the dependency on a third-party landlord. The trade-off is a collective responsibility for the building that requires your active participation as an owner.

Commonhold: The Tenure That Has Not Arrived Yet

Commonhold is a form of property ownership where each flat owner holds their unit outright — no lease, no freeholder, no time limit on their interest. Think of it as freehold for individual units within a larger building. The shared parts of the building are owned and managed through a Commonhold Association, which all unit owners belong to by statute.

Commonhold has existed in English law since the Commonhold and Leasehold Reform Act 2002, but it has seen almost no uptake. As of 2025, fewer than 20 commonhold developments exist across England and Wales. The reasons are complex — lenders were initially reluctant to lend on commonhold, developers found leasehold more financially attractive, and the legal framework had gaps that made commonhold impractical for some scenarios.

The government has made clear it intends to change this. The Commonhold White Paper published in March 2025 committed to making commonhold the default tenure for new flat development and allowing existing leaseholders to convert their leases to commonhold. The 2026 Draft Commonhold and Leasehold Reform Bill takes this further, proposing to ban new leasehold flats and establish commonhold as the standard arrangement going forward.

None of this is law yet. As of May 2026, all new flats are still sold as leasehold. But buyers purchasing new-build or recently built flats should be aware that the tenure of their property may be subject to significant legislative change during the period they own it.

How commonhold differs from share of freehold

In share of freehold: each flat owner still holds a leasehold interest in their unit. The lease has a term that eventually expires. The freehold company is a private arrangement between the owners.

In commonhold: there is no lease and no time-limited interest. Each owner holds their unit on a permanent basis, equivalent to freehold. The Commonhold Association is a statutory body defined by legislation, not a private company arrangement.

For buyers, the practical difference matters most when it comes to what happens in the long run. A share of freehold building where all owners fail to extend their leases will eventually have a problem. A commonhold building has no such risk — there is no lease to run out.

The Leasehold Reforms: What Has Changed and What Has Not

There has been more legislative activity around leasehold in the past two years than at any point since 2002. It is important to be precise about what is actually in force and what remains a proposal.

What is in force as of May 2026

Abolition of the two-year rule (31 January 2025): Under Section 27 of the Leasehold and Freehold Reform Act 2024, leaseholders can now exercise their statutory right to extend their lease or buy their freehold from the moment they are registered as owner at HM Land Registry. The previous requirement to have owned the property for two years before serving a statutory notice has been removed.

Ground Rent Act 2022: Financial ground rents are prohibited on new residential leases granted after 30 June 2022. Existing leases with financial ground rents in place are not affected.

Right to Manage improvements (March 2025): Limited provisions allowing more leaseholders in mixed-use buildings to apply for the Right to Manage came into force on 3 March 2025.

What is proposed but not yet law

  • Extension of standard statutory lease extensions from 90 years to 990 years for flats
  • Abolition of marriage value (currently subject to judicial review proceedings permitted in early 2025)
  • Reduction of ground rents on extended leases to a peppercorn
  • Changes to how lease extension premiums are calculated
  • Banning of new leasehold flat sales (Draft Bill, January 2026)
  • Making commonhold the default tenure for new flat development (Draft Bill, January 2026)
  • Capping existing ground rents at £250 per year and reducing to zero after 40 years (Draft Bill proposal, not yet law)

The critical point for buyers in 2026: the two-year rule is gone, which is a genuine practical improvement. The bigger changes — abolition of marriage value, 990-year extensions, commonhold as default — are still pending. Do not make purchasing decisions based on reforms that are not yet in force.

Lease Length: The Number Every Buyer Must Check

This is the most common area where buyers are caught off guard. The number of years remaining on the lease at the point of purchase affects your mortgage options, your future resale ability, and the cost of extending — all three significantly.

The 80-year threshold and marriage value
 Under current rules, once a lease falls below 80 years, a statutory lease extension triggers a marriage value payment — a share of the increase in the property’s value created by the extension itself, which the freeholder is entitled to receive. The shorter the lease below 80 years, the higher the marriage value, and the more expensive the extension becomes.
On a £500,000 London flat with a lease at 73 years, the marriage value component can add £20,000 or more to the extension premium compared to the same flat with 85 years remaining. This is money paid to the freeholder for the privilege of having let your lease get short.

What mortgage lenders require
 Most mortgage lenders require a minimum of 70 to 85 years remaining on a lease at the time of application. Many require more. Lenders typically want the lease to extend at least 30 years beyond the end of the mortgage term. On a 25-year mortgage, that means at least 55 years remaining at completion before the lender’s own minimum applies. A property with fewer than 75 years on the lease will be unmortgageable to a significant proportion of buyers and difficult to sell to anyone who needs a mortgage.

What to do if the lease is short
 If the property you want has fewer than 85 years on the lease, you have three options. First, negotiate a price that reflects the cost of extending. Get an informal valuation from a RICS surveyor to understand what the extension will cost — that figure should inform your offer. Second, ask the seller to begin the statutory extension process before the sale completes and assign the benefit of the claim to you at completion. Since the abolition of the two-year rule in January 2025, you can continue this process from day one as the new owner. Third, walk away and find a property where the lease position is straightforward.

Service Charges and Ground Rent: What to Check Before You Buy

For any leasehold purchase, there are specific financial obligations beyond the purchase price that require investigation before exchange.

Service charges

The English Housing Survey 2023/24 reported a median annual service charge of £1,920 for leasehold flat owners in London. For purpose-built developments with concierge, gym, or other communal facilities, charges significantly above this are common. Service charges are not fixed — they can rise year on year depending on what the building requires.

Before exchange, your solicitor should obtain at least three years of service charge accounts and the most recent buildings insurance schedule. Ask specifically whether there are any planned major works and what the current sinking fund balance is. A building that has deferred significant maintenance is carrying a liability that will hit leaseholders as a large one-off demand when the work can no longer be avoided.


Ground rent

The Ground Rent Act 2022 banned financial ground rents on new leases from June 2022. But millions of existing leases still carry ground rent clauses, some of which are seriously problematic. The most toxic are the doubling ground rent terms sold on new-build properties between roughly 2000 and 2020, where the ground rent doubles every 10 or 25 years. A £250 ground rent doubling every 10 years reaches over £8,000 per year after 50 years. Some mortgage lenders will not lend against properties with doubling ground rent clauses.

Your solicitor will check the ground rent clause as part of conveyancing. But ask them directly what the ground rent is, how it escalates, and whether there are any mortgage lenders who will refuse to lend on these terms. The government’s 2026 Draft Bill proposes to cap existing ground rents at £250 per year, but this is not yet law.

Frequently Asked Questions

What is the difference between leasehold and freehold in England?
Freehold means you own the property and the land it stands on outright and indefinitely — there is no time limit, no landlord, and no ground rent. Leasehold means you own the right to occupy the property for the number of years remaining on the lease. When that term expires, ownership reverts to the freeholder. According to MHCLG statistics published in May 2025, there are 4.83 million leasehold dwellings in England, representing 19% of the total housing stock. London has the highest proportion at 38%. Approximately 91% of owner-occupied flats in the private sector are leasehold. The vast majority of houses are freehold. In practical terms, leasehold means you are subject to a lease document governing what you can do with the property, you pay service charges and potentially ground rent, and you are dependent on a freeholder to maintain the shared structure. Freehold means none of those things apply.
Share of freehold means you own your flat on a leasehold basis but also hold a share in the company that owns the freehold of the building. You and your fellow flat owners are simultaneously leaseholders and co-freeholders. This arrangement typically arises when the leaseholders collectively purchase the freehold from the original freeholder through a statutory process called collective enfranchisement. Once the freehold company owns the building, the leaseholders manage it collectively. There is no external landlord setting service charges, choosing the insurance, or appointing a managing agent without your input. Extending your own lease becomes considerably simpler and less expensive because you are dealing with a company you are part of, rather than an arm’s-length freeholder who has a financial interest in extracting the maximum premium. For most buyers, share of freehold is preferable to standard leasehold in the same building — provided the freehold company is properly run and the other owners are cooperative.
Generally yes, from a buyer’s perspective, provided the building and the freehold company are well-managed. Share of freehold gives you control over your building’s management, simpler and cheaper lease extension, and a property that mortgage lenders and future buyers typically view more favourably than standard leasehold. You are not subject to a third-party freeholder who has their own financial interests in the building. The trade-off is responsibility. As a co-freeholder, you share decisions about the building with your neighbours, which requires cooperation and active engagement. The freehold company must be properly maintained — Companies House filings, director updates when flats change hands, and annual accounts. For the overwhelming majority of buyers, these obligations are manageable and the benefits significantly outweigh them.
As a practical rule, treat any lease with fewer than 85 years remaining as a matter requiring specific attention, and anything below 80 years as a significant problem. The 80-year threshold is critical because of marriage value — an additional premium that becomes payable in any statutory lease extension when the lease is below 80 years, representing the freeholder’s share of the value created by the extension. This can add tens of thousands of pounds to an extension on a London property. Most mortgage lenders require a minimum of 70 to 85 years remaining at the time of application, and many require more. Lenders typically want the lease to extend at least 30 years beyond the mortgage term — on a 25-year mortgage, that means at least 55 years remaining. Properties with fewer than 75 years on the lease will be difficult or impossible to sell to mortgaged buyers. The Leasehold and Freehold Reform Act 2024 proposes to abolish marriage value, but this is not yet in force and is subject to legal challenge.
The most significant change now in force is the abolition of the two-year ownership rule, which took effect on 31 January 2025. Leaseholders can now exercise their statutory right to extend their lease or buy their freehold from the day they become the registered owner — previously they had to wait two years. Right to Manage improvements also came into force on 3 March 2025. However, many of the Act’s most consequential changes are not yet in force: the extension of standard lease extensions to 990 years, the abolition of marriage value, the reduction of ground rents to a peppercorn on extended leases, and changes to how extension premiums are calculated all require further secondary legislation. In January 2026, the government published a Draft Commonhold and Leasehold Reform Bill proposing to ban new leasehold flats and make commonhold the default. This is a proposal, not law, and faces significant legal and legislative hurdles before it takes effect.
Marriage value is an additional cost that arises when a leasehold flat has fewer than 80 years remaining on the lease and the leaseholder applies for a statutory extension. It represents the increase in the combined value of the freeholder’s and leaseholder’s interests that is created by merging them through the extension — the freeholder is currently entitled to 50% of this figure. In practice, it means the shorter a lease gets below 80 years, the more expensive extending it becomes. For a London flat worth £500,000 with a lease at 73 years, marriage value can add £20,000 or more to the extension premium compared to the cost on the same flat at 85 years. This is why property professionals consistently advise extending before the lease drops below 80 years. The Leasehold and Freehold Reform Act 2024 proposes to abolish marriage value, but this provision is not yet in force and is the subject of judicial review proceedings permitted in early 2025.
Commonhold is a form of flat ownership where each owner holds their unit outright and permanently — no lease, no freeholder, no time-limited interest. It is equivalent to freehold ownership for individual flats. Shared areas of the building are owned and managed through a Commonhold Association, which all unit owners belong to by statute. Commonhold has existed in English law since 2002 but has seen almost no uptake — fewer than 20 commonhold developments exist in England and Wales as of 2025. The government intends to make commonhold the default tenure for new flats, replacing leasehold. The key difference from share of freehold is that in share of freehold, flat owners still hold leasehold interests with a finite term; in commonhold, there is no lease and no term. Commonhold is also governed by a statutory framework, whereas share of freehold is a private arrangement between owners.
Yes. A RICS Red Book valuation is required as part of the formal statutory lease extension process under the Leasehold Reform, Housing and Urban Development Act 1993. When a leaseholder serves a Section 42 notice on the freeholder, both parties typically instruct their own RICS-qualified valuers to assess the extension premium. The leaseholder’s valuer and the freeholder’s valuer negotiate a figure, and if they cannot agree within a two-month window following the freeholder’s counter-notice, the matter is determined by the First-tier Tribunal (Property Chamber). Using a RICS-qualified valuer with specific experience in lease extension premiums is essential — the difference between a well-supported and a poorly supported valuation can easily run to tens of thousands of pounds on a London flat. For buyers purchasing leasehold properties who anticipate needing to extend, an informal pre-purchase valuation estimate from a RICS surveyor can help you factor the likely extension cost into your offer and financial planning.

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