Why Buying A Leasehold Flat, It's Not What You Think In 2026

Updated 08 July 2026

Short Answer – When you’re buying a leasehold flat, or commonhold flat – you‘ must understand that it is ‘re buying a residential space in a commercial building. The common parts, i.e. the shared stairs, entrances, exits, corridors, halls (etc) are commercial property, and are run as a private business. The immediate reversioner (the landlord) owns the building and may instruct management agents to run the business for him. So when you buy a flat, you’re buying a share of a business that lets you live in the residential bit and use the commercial bit – because of the covenants in your lease say you can (or commonhold – it won’t make any different for the purposes of this article).

If you don’t understand how a business works, that it ought to be profitable, then you need to consider whether a flat is the right kind of property for you.

Use this form to ask a question about your leasehold flat

Buying a Leasehold Flat - a happy first time buyer

Why Buying a Leasehold Flat Is Not What You Think It Is

Most people dreaming of buying their first flat imagine a straightforward purchase: four walls, a front door, and the freedom to decorate and live as they wish. The reality in the UK is far more complex. When you buy a leasehold flat, you are not simply buying a home. You are buying a share in a business — a company (often a freeholder or management company) that owns and runs the entire building.

Your flat is just one part of that larger operation.

This “business” can be run formally with professional managing agents, clear accounts, and proactive maintenance. Or it can be run informally, even poorly, by a small group of residents or a distant freeholder. The difference between the two can cost you thousands of pounds a year and dramatically affect your ability to sell.

Crucially – this issue is not going to change with the incoming commonhold rules.

Buying a Leasehold Flat? You’re Buying Into a Shared Enterprise

In leasehold or commonhold , the freeholder (or the management company) controls the structure, exterior, and common parts of the building – the lease will only ‘demise’ the space which you live in, the stud walls and certain drains pipes and wire for example. Leaseholders pay to the freeholder or management company service charges for maintenance, insurance, cleaning, and repairs. These charges fund the “business” that keeps the block functioning.

When the business is run well, service charges feel fair and the building holds or increases in value. When it is run poorly, costs spiral. Disputes erupt over major works, insurance, or day-to-day management. Buyers and mortgage lenders increasingly scrutinise these issues, which can make flats harder to sell or finance.

Feelings matter — stress from bad neighbours or poor management is real — but facts matter more.

Transparency, accurate records, and proper governance are what protect your investment. Yet many buyers discover too late how little control they actually have.

A Cautionary Tale: The £180,000 Lesson – A high-profile case illustrates the risks perfectly.

Click for the link >Professor Daslav Brkic and his wife Paola Salmoria bought a ground-floor flat in a Victorian conversion in Finsbury Park, London.

After years of disputes with their freeholder (who lived upstairs), they tried to sell. Two substantial offers collapsed after the freeholder completed the LPE1 form (the leasehold property enquiries form) and disclosed past disagreements — including resolved issues about carpets, windows, and minor alterations.

The couple sued the freeholder for £80,000, claiming the disclosures breached their right to “quiet enjoyment” and scared buyers away. The court disagreed. The judge ruled that the freeholder was entitled — even prudent — to disclose factual information. Prospective buyers need to know what they are getting into. The couple were ordered to pay the freeholder’s costs (around £45,000) on top of their own legal bills of approximately £135,000 — a devastating £180,000 total hit.

This case shows the danger of challenging how the “business” is run. If you question service charges, management decisions, or disclosures, you risk an adverse costs order if the court finds the other side acted reasonably.

Running a Block of Flats Is Harder Than It Looks

Managing a modern block of flats has become highly complicated. Legislation such as the Building Safety Act introduced stricter fire safety rules. “Waking watch” patrols — 24-hour human fire monitors in buildings with safety concerns — can cost tens of thousands of pounds per year, sometimes passed on (at least partly) through service charges.

Add to this insurance premium hikes, major works projects running into six or seven figures, data protection rules, employment law for any staff, and accounting requirements. A competent managing agent helps, but good ones are expensive. Informal resident-run management can save money short-term but often leads to disputes, delays, and poor decisions when major issues arise.

Cutting corners is not recommended. Underfunded sinking funds, ignored repairs, or weak governance eventually result in higher bills or a building that becomes difficult to sell or insure.

Commonhold Reforms Are Coming — Slowly

The government is pushing major leasehold reform. A draft Commonhold and Leasehold Reform Bill aims to make commonhold the default for new flats, giving owners collective freehold-style control without a separate landlord. Existing leaseholders will eventually have easier routes to convert. But this new commonhold regime will mean that flat owners start arguing between themselves or the management company (committee?) rather than arguing with the freeholder

However, these changes face delays, including human rights considerations around interfering with existing property rights. Interestingly, the Brkic case itself involved arguments framed around human rights-style “quiet enjoyment” that ultimately failed. Full implementation will take time, so buyers today still face the current leasehold system with all its complexities.

Practical Advice for Buyers and Sellers

Do not rely on the seller’s enthusiasm alone. Get your own independent legal advice from a solicitor experienced in leasehold transactions.
Scrutinise the management. Request the last 3–5 years of service charge accounts, meeting minutes, reserve fund status, and major works history. Ask about ongoing disputes.
Check the LPE1 and supporting documents carefully. Understand what has been disclosed — and what hasn’t.
Budget for reality. Factor in ground rent, service charges (which often rise), and potential special assessments. A seemingly cheap flat can become expensive quickly.
Consider the building’s future. Is it likely to need expensive cladding or fire safety remediation? How is the freeholder or management company rated?

Buying a flat can still be a great way to get on the property ladder, especially in cities where houses are unaffordable. But it demands a more business-like mindset than buying a house. You are not just acquiring a home — you are joining (and becoming partly responsible for funding) a shared enterprise.

Treat it seriously. Do proper due diligence. Get independent advice. The emotional appeal of “my own front door” is powerful, but the financial and practical realities of shared ownership demand clear eyes and professional guidance.

Use the leasehold contact form to submit a question to CL

Useful Links

The Great Taking flop? How to check ‘ has your mortgage been securitised’ – with a free SAR Template (UK 2026)

Buying a Converted Property: Mortgage Risks, PCCs and Essential Legal Checks

Mortgage Repossession UK 2026 | When Can a Bank Repossess Your Home? Stay in control and reduce legal costs

Selling a House Without an EPC: Is It Money Laundering or Proceeds of Crime Under POCA?

Commonhold Conversion in 2026: Voluntary or Compulsory?

FAQ – Frequently Asked Questions

Frequently Asked Questions

What is a leasehold flat?

A leasehold flat means you own the right to live inside your individual flat as it is demised to you in the lease, but the retained parts, e.g. building’s structure, exterior, and common areas (stairs, hallways, roof, etc.) are owned and managed by a freeholder or management company as a private business. You pay service charges to maintain the shared parts.

Why is buying a leasehold flat not straightforward?

You are not just buying a home — you are buying into a shared business enterprise. Poor management, rising service charges, major repair bills, or disputes can significantly increase costs and affect your ability to sell the property.

What are the main risks of buying a leasehold flat?

Key risks include high or unexpected service charges, underfunded repair funds, building safety costs (e.g., fire safety or cladding), disputes with the freeholder or other residents, and difficulties selling if management issues are disclosed.

Will commonhold reforms solve leasehold problems?

Commonhold is coming and will become the default for new flats, giving owners more control. However, reforms for existing leasehold flats are delayed and will take time. Buyers today still face the traditional leasehold system. Commonhold will simply mean that commonholders argue with each other rather than with the landlord (since the landlord will be disenfranchised)

What should I check before buying a leasehold flat?

Always request the last 3–5 years of service charge accounts, reserve funds, meeting minutes, and major works history. Review the LPE1 form carefully, check for disputes, and get independent legal advice from a leasehold specialist.

Can disputes with the freeholder be expensive?

Yes. A high-profile case showed a couple ordered to pay around £180,000 in legal costs after unsuccessfully challenging disclosures made by their freeholder when selling their flat.

Why Buying a Leasehold Flat Is Not What You Think – The Hidden Business Risks