The apartment market in London depends on tenure as much as location. Buyers choosing between leasehold and share of freehold face new rules under the Leasehold and Freehold Reform Act 2024. This guide explains the key points clearly, helping homeowners make confident decisions. When comparing prime neighbourhoods, understanding how tenure influences control, costs and long-term value is essential. For informed advice, buyers can turn to trusted estate agents in Kensington and Chelsea for expert local insight.
What Leasehold means
Leasehold grants the right to live in a property for a fixed term under a contract with the freeholder. The lease sets obligations on repairs, alterations and building management, and the leaseholder usually pays service charges for shared areas. Ground rent applies mainly to older leases but is now set to a nominal level for most new long residential leases under recent legislation.
What is Share of Freehold?
Share of freehold, common in flats, means owning your apartment on a long lease and also owning a share of the freehold title, with other flat owners in the building, usually through a company structure. This allows joint control over maintenance, insurance and lease extensions, provided there are clear rules.
Why the Law has Changed
The Leasehold Reform (Ground Rent) Act 2022 reduced ground rent on most new long leases to a nominal peppercorn, removing a routine cost for buyers. The Leasehold and Freehold Reform Act 2024 introduced wider reforms to strengthen leaseholder rights, simplify leasehold extensions and improve transparency.
Key measures include ending the two-year ownership rule, expanding the Right to Manage from 2025 and creating longer standard lease extensions at nominal rent. Some provisions are in force while others require secondary legislation, so timing matters when planning next steps. Buyers should check which provisions apply to their building and completion date.
Control and Governance
Leasehold places day-to-day control with the freeholder direct or through a managing agent. Share of freehold brings decisions closer to residents, which can be positive where neighbours engage constructively. The trade-off is responsibility. Without a clear company structure, agreed procedures and meeting discipline, decisions on major works can stall.
Maintenance and Service Charges
Under leasehold, service charges are set according to the lease and the management contract. Recent reforms aim to improve transparency and give leaseholders stronger routes to scrutinise costs and challenge poor practice. In a share of freehold block, owners can set budgets and appoint agents directly, but they must commit to forward planning and keep proper records.
Lease Length and Mortgageability
Lenders assess lease term and wording closely. Short leases hinder financing and demand, though current laws simplify extensions for new buyers.
Insurance and Building Safety
Insurance remains a major building cost. All owners should review cover, reinstatement values and safety compliance. Reforms improving transparency on charges and commissions aim to deliver fairer outcomes for residents.
Pros of Leasehold
- Minimal governance burden when a competent agent manages the building.
- Clear contractual framework ensures maintenance and compliance.
- Growing consumer protections on service charge transparency and rights to manage where standards fall short.
Cons of Leasehold
- Limited control over spending and project timing.
- Exposure to variable service charges and administration fees.
- Need to extend the lease as terms shorten, though the legal process is now clearer.
Pros of Share of Freehold
- Direct control over budgets, specifications and managing-agent choices.
- Length of leases not so relevant as can always be extended.
- Strong alignment of interests among resident owners.
Cons of Share of Freehold
- Governance risks without clear procedures and voting rights.
- Potential neighbour disputes over major works.
- Need for well-planned reserves to avoid sudden capital calls.
Historic context in London
The apartment market here, rooted in converted period buildings, explains the dominance of leasehold ownership. Policy now favors longer terms, simpler enfranchisement and a shift toward commonhold. Buyers should evaluate building documentation and management quality as carefully as the façade and address.
Who should consider Leasehold
Leasehold suits buyers who prefer professional external management and a defined structure. It is practical for those purchasing in larger blocks with established agents and detailed maintenance programmes. The improving regime for transparency and challenge gives additional comfort where standards need to rise.
Who should consider Share of Freehold
Share of freehold suits smaller or well-run blocks where owners are engaged. It works best with a limited company, clear articles, a participation agreement and a disciplined approach to budgeting. Prospective owners should review minutes, accounts and the reserve fund policy before exchange.
Practical Due Diligence
- Confirm the unexpired lease term and the route to extension now available.
- Read the last three years of service charge accounts and major works plans.
- Review insurance cover, claims history and any safety compliance works.
- For share of freehold, check the company structure, shareholder rights and transfer mechanics on sale.
- Ask for evidence of an active reserve fund sized to expected lifecycle works.
Market Lens for Prime Areas
In prestigious Central London, tenure strongly influences value and liquidity. Long leases with minimal ground rent and transparent management define top-tier blocks. Share of freehold attracts a premium when governance and documentation are robust. In both cases, condition, specification and street context in terraces or mansion blocks remain central to pricing.
How a Local Agent helps
A seasoned London agent will review the lease, management and financials alongside the physical inspection. Maskells can liaise early with solicitors, anticipate lender requirements and secure the documentation buyers will need for an efficient sale in competitive markets.
Conclusion
The choice between leasehold and share of freehold is ultimately a question of control, governance and future planning. While legal reforms have eased costs and improved consumer rights, strong management and clear documentation remain crucial. Buyers should judge each block on its paperwork and people, not just the postcode. For those weighing a move in prime Central London’s terraced houses converted into flats or modern developments, a careful tenure review at the start will set the tone for confident ownership over the long term.