Why Most Flats Are Leasehold

If you are viewing flats, you will quickly notice that almost every one of them is leasehold. This is not a quirk of the market — it is a direct result of how buildings are owned in England and Wales. A block of flats sits on one piece of land, and someone owns the freehold of that land and building. Rather than splitting the building into physical slices, the law grants each flat its own lease: a long-term right to occupy a specific property for a set number of years.

So when you buy a leasehold flat, you are buying the lease itself, plus the right to live in the flat for the remaining term. The freeholder — sometimes called the landlord — retains ownership of the structure, the land and the common parts. In Scotland the system works differently, and most flats there are owned outright with shared responsibilities for the building. For the rest of this article, we will focus on England and Wales, where leasehold is the norm.

What You Actually Own — and What You Do Not

With a leasehold flat, your ownership typically covers the interior of the property: the plaster, the internal walls, the floor surfaces, the kitchen and bathroom fittings. What usually falls outside your ownership includes:

• The external walls, roof and foundations
• The entrance hall, stairwells, lifts and communal gardens
• The structure of the building and its shared services

A freehold house, by contrast, means you own the building and the land it sits on, subject to any restrictions registered against the title. With a flat, the freeholder is responsible for maintaining the building, and you pay towards that through your service charge. This is the central trade-off: less responsibility day to day, but less control and ongoing costs.

The Ongoing Costs of a Lease

Budgeting for a leasehold flat means looking beyond the mortgage. There are three regular costs to get to grips with.

• Service charge: your share of the building's running costs — cleaning, lighting, lifts, communal heating, gardening, management fees. It can range from a few hundred pounds a year in a small converted house to several thousand in a large block with concierge and gym facilities.
• Ground rent: an annual payment to the freeholder. On leases granted after 30 June 2022, ground rent is capped at a peppercorn, effectively zero. Older leases can still carry ground rent, and some have clauses that double it every ten or twenty years. Those clauses can make a flat difficult to mortgage.
• Buildings insurance: usually arranged by the freeholder and recharged to you. You will normally need your own contents insurance on top.

Ask to see the last three years of service charge accounts and the current budget. A healthy reserve fund is a good sign; a large deficit can mean a hefty bill is coming. Also ask about any planned major works — under section 20 rules, leaseholders must be consulted on works costing more than £250 each, but that consultation does not make the cost disappear.

Lease Length: The Number That Matters Most

The length of the lease is often the single most important figure in the whole transaction. A 999-year lease is comfortable. A lease with 85 years remaining is a different conversation.

Once a lease drops below 80 years, extending it becomes significantly more expensive, because the freeholder becomes entitled to a share of the property's value — known as marriage value. Many mortgage lenders also grow cautious below 70 years, which can narrow your pool of buyers if you later want to sell.

You generally have the legal right to extend a lease once you have owned the flat for two years, adding 90 years to the existing term and reducing ground rent to zero. It is a formal process, usually handled by a solicitor and a surveyor, and it costs money. If you are buying a flat with a shorter lease, factor in the cost of extending either now or soon after completion — and consider asking the seller to start the process before you exchange contracts.

Freehold Flats, Share of Freehold and Commonhold

There are alternatives worth knowing about. A share of freehold means you and the other flat owners collectively own the freehold, often through a company. You still have a lease, but you have a say in how the building is run, and you can usually extend your lease cheaply or for free. It is often the best of both worlds, though it does mean sharing responsibility for maintenance decisions with your neighbours.

A genuine freehold flat — where you own the flat outright with no lease — is rare and can be awkward to mortgage, because there is no clear legal mechanism for enforcing shared repair costs. Commonhold is a third option, designed to give flat owners freehold-style ownership with a shared management body. It has existed since 2004 but remains uncommon. If you encounter it, it is generally worth a closer look rather than an automatic concern.

What to Check Before You Book a Viewing

A little homework before you travel to see a flat saves a lot of time. When you request the details, ask for the following:

• The number of years remaining on the lease, and whether a lease extension is already underway
• The current annual service charge and ground rent, plus the last three years of accounts
• The size of the reserve fund and any planned major works
• Whether the building has any cladding or remediation issues, and whether an EWS1 form or similar certificate exists
• The name of the managing agent, and whether leaseholders have exercised the right to manage
• Any restrictions in the lease on subletting, pets or home working

None of this replaces proper legal advice. A good conveyancer will read the lease in full and flag anything unusual, and a surveyor can comment on the building's condition. But arming yourself with these questions early means you walk into a viewing knowing whether the flat genuinely fits your budget — not just this year, but for as long as you plan to live there.