Leasehold vs freehold on a new build, and estate charges

The three types of tenure

Tenure is the legal basis on which you own your home. This guide covers England and Wales. Scotland has a different property system.

Under the New Homes Quality Code, a registered builder must tell you the tenure and the length of any lease before you reserve, and your reservation agreement must state the tenure and all its costs, including how those costs may change.

Leasehold on new builds

A lease gives you the right to occupy your home for a fixed term. The freeholder (often called the landlord) keeps the land and usually the structure and shared parts of the building, and is usually responsible for insuring and maintaining them. You pay for that through a service charge.

The New Homes Quality Code describes a service charge as what a leaseholder pays towards services, repairs, maintenance, insurance, improvements and management, as set out in the lease. The amount can change from year to year with the costs.

Ground rent: the 2022 ban

The Leasehold Reform (Ground Rent) Act 2022 limits ground rent on most new long residential leases to a peppercorn, which in practice means no ground rent at all. Government guidance says it applies to regulated leases that are:

• granted on or after 30 June 2022 (1 April 2023 for retirement homes)
• of a single dwelling
• for more than 21 years
• granted for a premium (the purchase price)

The Act does not apply where contracts were exchanged before the start date, even if the lease was granted later. For shared ownership homes, the peppercorn applies to the share you own. The landlord also cannot charge an administration fee for collecting a peppercorn rent.

If a lease covered by the Act asks for more than a peppercorn, it is treated as if it asks for the permitted rent. If you have paid ground rent you should not have, government guidance says to ask the landlord to repay it within 28 days. Trading Standards enforce the Act and can fine landlords between £500 and £30,000, and you can apply to the First-tier Tribunal for a recovery order.

Lease length

A lease runs down every year, and a shorter lease can make a home harder to sell or mortgage. Always check the term, which the builder must tell you. Since 31 January 2025, leaseholders no longer have to have owned the lease for two years before they can extend it or buy the freehold, after section 27 of the Leasehold and Freehold Reform Act 2024 came into force.

Leasehold houses

The Leasehold and Freehold Reform Act 2024 includes a ban on granting most new long leases of houses, but that part of the Act has not been brought into force. The government's latest commencement regulations, made on 25 October 2026, do not include it. Until it is, a builder can still sell a new house on a lease. Ask about tenure for every house you consider.

Freehold and estate management charges

On many new estates, the council does not adopt the roads, green spaces, play areas or drainage. Instead, a private management company looks after them, and every homeowner pays an estate management charge, even if they own their house freehold. The New Homes Quality Code calls these estate charges: contributions towards the upkeep of the development's communal areas.

The scale is large. The government's two December 2025 consultations say there may be as many as 1.75 million homes on privately managed estates in England, although not all pay charges, and that the Competition and Markets Authority found 80% of new homes sold by the 11 biggest builders in 2021 to 2022 were subject to estate management charges.

What estate charges usually pay for

• maintaining roads, paths and street lighting that the council has not adopted
• grass cutting, landscaping, trees and play areas
• sustainable drainage such as ponds, swales and pumping stations
• the management company's own fees, insurance and accounts

Why freehold estate charges need care

Leaseholders have long had legal rights to challenge unreasonable service charges. Freehold homeowners paying estate charges do not, yet. The government's consultation says estate managers face very few legal requirements on transparency, homeowners often have limited information about how their estate is run, and for many the only route is the county court, which is costly and slow.

Some estate charges are secured by a rentcharge in the deeds. The consultation notes that rentcharge owners can use powers in sections 121 and 122 of the Law of Property Act 1925 without giving notice, and says the government intends to repeal those sections. Ask your conveyancer exactly how your estate charge is secured and what happens if a payment is missed.

Event fees

Some leases and freehold deeds charge a fee when something happens, such as selling or subletting. The New Homes Quality Code calls these event fees and notes other names for them, including exit fees, transfer fees, deferred management fees, consent fees and selling service fees. Registered builders must tell you in the reservation agreement about any event fees and how they will be assessed.

What has changed and what is coming

Leasehold law is being reformed in stages. Here is where things stand on 7 November 2026.

The 2024 Act's estate rights

When Part 5 of the Leasehold and Freehold Reform Act 2024 is brought into force, the government's consultation says freehold homeowners will gain rights similar to leaseholders': estate management charges must be reasonably incurred, homeowners can challenge their reasonableness at a tribunal, and they can apply to replace a failing estate manager. The consultation also proposes annual reports, a standard demand form and better rights to information. No start date has been set.

The draft Commonhold and Leasehold Reform Bill

In January 2026 the government published a draft Bill for scrutiny. It proposes banning leasehold for most new flats, reforming commonhold so it can replace leasehold, capping ground rent on existing leases at £250 a year and reducing it to a peppercorn after 40 years, abolishing forfeiture, and repealing the harsh enforcement powers attached to estate rentcharges. The government said the ground rent cap could come into force in late 2028, subject to Parliament. None of this is law yet.

Fewer private estates in future

A second government consultation, which closed in March 2026, looked at reducing the number of privately managed estates. Proposals include common standards so councils and utilities can adopt roads, sewers and drainage, and stopping new arrangements where a management company is written into the property deeds, which the government said it agrees are unwarranted. These are proposals, not rules.

What to check before you reserve

Registered builders must give you an affordability schedule with your reservation: a list of costs tied to the tenure and management of the home over the five years after the sale, including ground rent and estimated estate or service charges, and costs of maintaining shared equipment such as communal heating. If the builder does not know the amounts, it must still list the costs. It must also show who owns and is responsible for the surrounding land and facilities. Use it to ask these questions.

For any new home

• Is the home freehold, leasehold or commonhold? If leasehold, how long is the lease?
• Is there an estate management charge? How much is it now, what does it cover, and how has it been estimated?
• Who is the management company, who controls it, and will residents ever take it over?
• Will the council adopt the roads, sewers and open spaces, and when?
• Are there future phases or facilities that could add to the charge?
• Is the charge secured by a rentcharge, and what happens if a payment is late?
• Are there any event fees on selling, letting or making changes?

For a leasehold flat

• Is the ground rent a peppercorn? If not, why not?
• What is the estimated service charge, what does it include, and is there a sinking fund for future repairs?
• Who insures the building, and what share of the premium do you pay?
• What does the lease say about pets, letting, alterations and selling?

Ask your conveyancer to explain each answer in writing before you exchange. The cost of buying a new build guide shows how annual charges fit into the full picture, and the cash you need calculator works out what you pay up front.

If you are buying through a scheme

Shared ownership homes are sold on a lease, and you pay rent on the share you do not own as well as any service charge. See the shared ownership scheme page for how it works. Other schemes, such as First Homes, have their own rules that your conveyancer will check alongside the tenure. The schemes page lists them all.

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