New Build Leasehold Trap — What Buyers Must Avoid in 2026

Between approximately 2000 and 2020, tens of thousands of new-build houses were sold as leasehold — often with ground rent clauses that doubled every 10 or 25 years. In 2026, major legal reforms have changed this landscape significantly. Here is what you need to know.

The Scandal — What Went Wrong

Buyers purchased new-build houses — not flats, but houses — as leasehold properties. Many were unaware of the implications. Ground rent clauses that doubled every 10–25 years meant that a £200/year ground rent became unaffordable within 30–50 years. Properties became effectively unsellable when lenders refused to mortgage them, and the cost of buying the freehold was prohibitive.

The Competition and Markets Authority (CMA) investigated several major developers and reached agreements with them to address the most egregious clauses. But structural reform required legislation.

What the Law Now Says

**Leasehold Reform (Ground Rent) Act 2022:** for any new lease created from 30 June 2022 onwards, ground rent must be zero (a "peppercorn"). Charging any financial ground rent on a new residential lease is a criminal offence.

**Leasehold and Freehold Reform Act 2024:** this wider reform includes provisions making it a requirement for new-build houses to be sold as freehold. It also significantly improved leaseholders' rights in relation to service charges, managing agents, and the right to manage.

What to Check When Buying a New Build in 2026

**New build houses:** should be sold as freehold. If a developer attempts to sell a new-build house as leasehold, take immediate legal advice and contact a specialist solicitor. This is not expected to be compliant with current law.

**New build flats:** flats remain legitimately leasehold (the ownership structure for multi-occupancy buildings requires it). However, check:

• Ground rent must be peppercorn (zero) — reject any lease with financial ground rent
• Service charge — review the budget; check whether it is capped or variable; understand what it covers
• Service charge transparency rights — developers must now provide clearer accounts and budgets
• Management company — who will manage the building after the developer moves on?
• Lease length — should be 125, 250, or 999 years for a new build

Freehold Estates and Managed Charges

Note that even freehold houses on new developments may be subject to estate management charges for shared facilities such as unadopted roads, communal spaces, and play areas. These are NOT caught by leasehold reform and are payable by freeholders. Check for these before buying (see our separate guide on estate charges).

If You Bought a Leasehold House Before the Reforms

Leaseholders who bought new-build houses before the reforms have strengthened rights under the 2024 Act:

• **Lease extension:** statutory right to extend by 990 years (increased from 90 years) at a peppercorn ground rent
• **Collective enfranchisement:** right to buy the freehold collectively with other leaseholders
• **Individual enfranchisement:** right to buy your own freehold for a house

The cost of these rights has also been reformed to make them more accessible. Take advice from a specialist leasehold solicitor if you own a pre-reform leasehold house.

Store all your leasehold documents — your lease, service charge accounts, management company correspondence, and ground rent receipts — in Property Passport UK. This documentation is essential for any future sale and for exercising your statutory rights.