Freehold flats: why lenders refuse them, and whether one is worth buying

In England and Wales, a freehold flat is usually a mortgage and resale problem because flats need enforceable repair, insurance and cost-sharing duties between different owners. Scotland is different: flats can be owned outright without a lease and lenders commonly accept them; Northern Ireland is lender-by-lender and has no commonhold statute.

What is a freehold flat, and can you own a flat without a lease?

A freehold flat in England and Wales is a flat owned as a freehold estate rather than under a lease, and you can legally own one without a lease, but outside commonhold it is unusual and often defective for mortgage purposes. The clearest lawful freehold-flat model is commonhold: the Commonhold and Leasehold Reform Act 2002 says, “A person is the unit-holder of a commonhold unit if he is entitled to be registered as the proprietor of the freehold estate in the unit,” and Land Registry guidance adds, “The unit-holder owns the freehold interest in the unit and is a member of the commonhold association which owns and manages the common parts.” That answers whether you can have a freehold flat or buy a flat that is not leasehold: yes, but ordinary flats in England and Wales are still “almost inevitably” leasehold, and commonhold remains rare, with “fewer than 20 developments” built.

What is the problem with freehold flats?

The problem with freehold flats in England and Wales is that equity will not enforce a positive freehold covenant, such as repair, insurance or contribution to service costs, against a later owner, apart from a narrow conditional-benefit exception. The House of Lords rule in Rhone v Stephens is the real starting point: “For over a hundred years it has been clear and accepted law that equity will enforce negative covenants against freehold land but has no power to enforce positive covenants against successors in title of the land.” That means a downstairs or upstairs freeholder may need the other flat owner to maintain a roof, wall, staircase, pipe or structure, but the title may not bind the next owner to pay or do the work. Government notes to the 2002 Act describe why flats were usually put into leasehold structures: “There is no satisfactory scheme at present which would allow for freehold ownership in such circumstances.”

Can you get a mortgage on a freehold flat?

You can sometimes get a mortgage on a freehold flat in England and Wales, but lenders split sharply: Barclays refuses ordinary freehold flats, NatWest may lend up to 90% loan to value where its conditions are met, and other lenders only accept narrow share-of-freehold or coach-house arrangements. UK Finance’s handbook makes the point lender-specific: “If any part of the property comprises or is affected by a flying freehold or the property is a freehold flat, check part 2 to see if we will accept it as security.” Barclays’ Part 2 says, “Freehold flats and maisonettes are not considered suitable as security for mortgages,” while NatWest’s Part 2 says, “The maximum Loan to Value is restricted to 90%.” Mortgage companies do not dislike freehold flats because freehold is inherently unmortgageable; they dislike the enforcement gap around repair and contribution covenants, which can make the flat weak security.

Does owning a freehold mean there is no mortgage on it?

Owning a freehold does not mean there is no mortgage on it: freehold describes the tenure, while a mortgage or legal charge is a separate burden on the title. In England and Wales, the Law of Property Act 1925 expressly allows a mortgage of a fee simple, saying it may be made “by a charge by deed expressed to be by way of legal mortgage.” HM Land Registry also treats ownership and mortgage entries as separate title information: “The register shows important information about the property, such as the names of the legal owners and whether there are any mortgages, rights of way or other legal matters that affect it.” So the phrase freehold does not mean mortgage-free, debt-free or unencumbered. A house or flat can be freehold and still have a lender’s registered charge against it until the mortgage is redeemed and the charge is removed.

Are freehold flats hard to sell?

Freehold flats in England and Wales are usually harder to sell than equivalent leasehold or share-of-freehold flats because many buyers need a mortgage and many lenders reject or restrict this security. There is no legal ban on selling or registering one: Land Registration Rules allow registration where the land is above or below the surface if the applicant gives “sufficient information to define the vertical and horizontal extents of the land.” The practical problem is marketability, not title existence. Government consultation material explains that “enforcing mutual obligations of building owners can be challenging,” so such properties are “typically sold with a lease to manage these arrangements.” Santander’s Part 2 answer illustrates the lender barrier: for ordinary freehold flats it says, “No, but we will lend if the flat comes within 5.8.1 to 5.8.5 of the Handbook.” Scotland should not be lumped in: one lender’s criteria say, “freehold flats and maisonettes are acceptable in Scotland.”

Should you buy a freehold flat?

You should only buy a freehold flat in England and Wales if your conveyancer confirms the repair, insurance, access and cost-sharing structure is enforceable and your intended lender will accept that exact title. There is no statutory rule saying a buyer must not buy one, but the usual buyer question is whether buying a freehold flat is a good idea in practice, and the answer is usually no for an ordinary non-commonhold unit-only freehold unless the price reflects the mortgage and resale risk. Commonhold is the designed freehold-flat vehicle: the 2002 Act requires that “the freehold estate in the land is registered as a freehold estate in commonhold land,” and the Law Commission describes commonhold as introduced “to make possible the freehold ownership of flats.” But commonhold is still rare, and a single upper-floor freehold cannot simply be made commonhold alone because raised land generally needs the land beneath it in the same application.

How do you fix a freehold flat so it can be mortgaged and sold?

The usual England-and-Wales fix is to grant and register a new long lease for each flat, then keep, split or share the building freehold behind those leases, because lenders understand enforceable leasehold repair and contribution covenants. That is what solicitors do in small converted buildings: one conveyancing firm prices “creating the new leases” at “£650 plus VAT per flat where there are two to four flats in the building.” If the new lease is a regulated residential lease, the Leasehold Reform (Ground Rent) Act 2022 means “The permitted rent is a peppercorn rent.” A two-owner shared freehold is not itself the problem if each flat also has a proper long lease; the problem is trying to sell two bare freehold flat titles that depend on positive covenants between successors. Commonhold is the statutory alternative, but it is not the normal market fix because “fewer than 20 commonhold developments have been established” since the legislation came into force.

Last reviewed August 2026.

Sources

• Commonhold and Leasehold Reform Act 2002 s.12 — “A person is the unit-holder of a commonhold unit if he is entitled to be registered as the proprietor of the freehold estate in the unit (whether or not he is registered).” Source
• HM Land Registry Practice Guide 60 — “The unit-holder owns the freehold interest in the unit and is a member of the commonhold association which owns and manages the common parts.” Source
• Law Commission commonhold project — “Flats in England and Wales continue to be owned, almost inevitably, on a leasehold basis.” Source
• Commonhold White Paper — “Since then, commonhold has failed to take off, with fewer than 20 developments being built comprising fewer than 200 commonhold units.” Source
• Rhone v Stephens [1994] UKHL 3 — “For over a hundred years it has been clear and accepted law that equity will enforce negative covenants against freehold land but has no power to enforce positive covenants against successors in title of the land.” Source
• Commonhold and Leasehold Reform Act 2002 explanatory notes — “There is no satisfactory scheme at present which would allow for freehold ownership in such circumstances.” Source
• UK Finance Lenders’ Handbook, England and Wales, Barclays — “If any part of the property comprises or is affected by a flying freehold or the property is a freehold flat, check part 2 to see if we will accept it as security.” Source
• Barclays Part 2, UK Finance Lenders’ Handbook — “Freehold flats and maisonettes are not considered suitable as security for mortgages as are coach house flats see also 5.8.1 and 5.8.5” Source
• NatWest Part 2, UK Finance Lenders’ Handbook — “The maximum Loan to Value is restricted to 90%.” Source
• Law of Property Act 1925 s.85 — “A mortgage of an estate in fee simple shall only be capable of being effected at law either by a demise for a term of years absolute, subject to a provision for cesser on redemption, or by a charge by deed expressed to be by way of legal mortgage:” Source
• HM Land Registry, how to read a title register — “The register shows important information about the property, such as the names of the legal owners and whether there are any mortgages, rights of way or other legal matters that affect it.” Source
• Land Registration Rules 2003 reg.26 — “Subject to paragraph (2), unless all of the land above and below the surface is included in an application for first registration the applicant must provide a plan of the surface on under or over which the land to be registered lies, and sufficient information to define the vertical and horizontal extents of the land.” Source
• MHCLG consultation on moving to commonhold — “To avoid the legal complexity of ‘flying freeholds’ (where each property is owned freehold but enforcing mutual obligations of building owners can be challenging), such properties are typically sold with a lease to manage these arrangements.” Source
• Santander Part 2, UK Finance Lenders’ Handbook — “No, but we will lend if the flat comes within 5.8.1 to 5.8.5 of the Handbook.” Source
• The Mortgage Lender BTL property criteria guide — “Flats and maisonettes in England & Wales must be leasehold, freehold flats and maisonettes are acceptable in Scotland.” Source
• Commonhold and Leasehold Reform Act 2002 s.1 — “(a)the freehold estate in the land is registered as a freehold estate in commonhold land,” Source
• Law Commission Commonhold Report — “Indeed, commonhold was introduced in 2004 to make possible the freehold ownership of flats.” Source
• Commonhold and Leasehold Reform Act 2002 Sch.2 — “Subject to sub-paragraph (2), an application may not be made under section 2 wholly or partly in relation to land above ground level (“raised land”) unless all the land between the ground and the raised land is the subject of the same application.” Source
• Kenneth Elliott & Rowe, splitting property into flats — “Typically the cost of creating the new leases is £650 plus VAT per flat where there are two to four flats in the building.” Source
• Leasehold Reform (Ground Rent) Act 2022 s.4 — “The permitted rent is a peppercorn rent.” Source
• Law Commission commonhold project — “However, fewer than 20 commonhold developments have been established since the commonhold legislation came into force.” Source