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Leasehold vs freehold - The differences

Sep 11, 2024
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Ready to take your first steps into the homebuying world? If so, it’s important to know the difference between ‘freehold’ and ‘leasehold’. Our handy guide explores the pros and cons of each type of ownership and answers frequently asked questions to help you find the best option for you.

Key Takeaways

Freehold:
  • Owning the freehold means you own both the property and the land it stands on indefinitely.
  • Houses are typically sold as freehold properties.
 
Leasehold:
  • As a leaseholder, you own the property but not the land it’s built on.
  • Ownership is for a set period, which can be years, decades, or centuries, depending on the lease length.
  • Most flats are sold as leasehold properties, with the freehold held by the builder or another entity.

In short:

Leasehold

You effectively own the property, but not the land it’s built on.

Freehold

You’re the sole owner of the building and the land it sits on forever – or at least until you decide to sell it.

 

Illustration of home improvements

What is a freehold? 

Buying a freehold property means owning the home and the land it sits on outright. You don’t pay any ground rent*, service charges or admin fees. You’re responsible for the upkeep of the building, and your name will be listed on Land Registry records as the freeholder.
 
*Ground rent is a token fee paid annually to the freeholder in exchange for renting the land that the property sits on.  
 

Freehold pros and cons 

Some of the pros and cons of freehold properties include: 
 
Freehold pros Freehold cons
Full ownership of the house and land. 
 Usually more expensive. 
No ground rent, admin fees or service charges. 
 It can be challenging to find freehold flats. 
Freedom to decorate your home as you wish. 
 Responsibility for the upkeep of the building.  
No concerns about the lease running out. 
  

 

Illustration of home and contract

What is a leasehold? 

When you buy a leasehold property, you own it for a specific period, but you don’t own the land it stands on. Instead, the landlord (or ‘freeholder’) owns the land. Once your lease runs out, property ownership will revert to the landlord unless you extend it. 
 
As the leaseholder, you’ll need permission from the landlord to make changes to the property. You’ll also need to pay ground rent and service charges, and you may be asked to pay an annual fee to a managing agent.  
 

Leasehold pros and cons 

 
These are some pros and cons of buying a leasehold: 

 

Leasehold pros Leasehold cons
Usually cheaper than freehold. 
 Shared ownership of the property and land. 
No costs for maintenance or repairs. 
 Ground rent and service charges are paid on top of your mortgage. 
No responsibility for maintaining communal areas. 
 Written permission is needed to make changes to your home. 
No responsibility for paying building insurance. 
 Written permission is required to keep pets or run your business from your home. 
  Potential difficulty selling a leasehold with a shorter lease. 
 

Leasehold FAQs 

Find the answers to frequently asked questions about leasehold properties below.  
 

What is a good lease length? 

 
As a general rule, the longer your lease period, the better. A leasehold should have at least 80 years left. Anything below this could affect its value, making selling or getting a mortgage more difficult. 
 

How do I determine how many years are left on the lease?

 
If you bought a leasehold property, you should have a copy of your lease, which outlines how many years are left. If you can’t retrieve the document, ask your freeholder or solicitor, though the former may charge a small fee. Another option is downloading your title register from the Land Registry, which costs £3. 
 

Can I extend my lease? 

 
Yes. You can request an extension if you’ve owned the leasehold for two years. You can ask your freeholder to extend the lease by up to 90 years if you’re a qualifying tenant*. The freeholder will charge a fee depending on the property type. 
 
*You’re a qualifying tenant if your original lease was for more than 21 years. 
  

Illustration of a home and paperwork

What are the main differences between a leasehold and a freehold?

 

Getting your head around leasehold and freehold can be tricky, so to recap here are the top three considerations:

 

1. The length of ownership

If you opt for a freehold, your property will be yours until you sell it. A leasehold property is yours until the lease period expires. It then belongs to the freeholder again.

 

2. Responsibility for major problems

With a freehold property, you’ll be responsible for fixing any big problems such as subsidence or storm damage. With a leasehold, many major problems will be the freeholder’s or property management company’s responsibility – but you may still have to contribute financially depending on the terms of your lease.

 

3. Ease of getting a mortgage

It’s often easier to get a freehold mortgage, as it’s a standard mortgage type. Leasehold mortgages are a bit more specialist and can be trickier to find.

 

Discover our energy-efficient properties across the UK, including 4 bedroom and 5 bedroom homes. Call our Sales Advisers at your nearest development to find the right offer and property for you.

 
 

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