Answers · UK 2025/26

What is the difference between freehold and leasehold?

Freehold means you own the property and the land it stands on outright, indefinitely, with no ground rent or lease to worry about. Leasehold means you own the right to occupy the property for a fixed number of years (the lease term), typically paying ground rent and service charges to a separate freeholder who owns the underlying land and building structure.

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Understanding whether a property is freehold or leasehold is one of the most fundamental things to check before buying, since it significantly affects your long-term costs, control, and the property's future saleability. **Freehold ownership** With a freehold, you own the building and the land it sits on outright and indefinitely -- there is no landlord, no lease to run out, no ground rent, and generally more freedom to alter the property (subject to normal planning permission rules) without needing a freeholder's consent. Most houses in England and Wales are sold freehold. **Leasehold ownership** With a leasehold, you own the right to occupy the property for a set number of years defined in the lease (commonly starting at 99, 125 or even 999 years for new leases, though older leases can be much shorter), while a separate freeholder owns the underlying land and the building structure -- most flats and some newer houses are sold leasehold. **Ongoing leasehold costs** Leaseholders typically pay ground rent to the freeholder (increasingly being phased toward a peppercorn/zero rate for new leases under recent reforms) and service charges covering maintenance of shared areas, buildings insurance, and management costs -- these ongoing costs do not apply to freehold properties. **Why remaining lease length matters** As a lease gets shorter (particularly below 80 years), the property becomes harder to mortgage and sell, and the cost to extend the lease increases significantly due to "marriage value" charges -- checking the remaining lease term is essential before buying a leasehold property, and lease extension costs should be factored into your offer if the term is getting short. **Leasehold reform changes** Recent leasehold reform legislation aims to make life easier for leaseholders, including measures like banning new leasehold houses (in most circumstances), reducing ground rents on new leases, and simplifying the lease extension and freehold purchase ("enfranchisement") process -- but implementation has been phased, and existing older leases are not automatically changed by these reforms. **Commonhold as an emerging alternative** Commonhold is a newer ownership structure (more common in some other countries) that the government has signalled intent to promote further as an alternative to leasehold flats, where each flat owner has a freehold-style interest and jointly manages shared areas without a separate freeholder -- though it remains relatively rare in current UK practice. **Worked example** A buyer compares two similar flats: one leasehold with 95 years remaining and £200 annual ground rent plus £1,500 annual service charge, and one in a converted house sold as a share of freehold (giving the leaseholders collective control over the building) -- the share of freehold option typically offers more control and potentially lower long-term costs, though the specific management arrangement still matters. **Practical tip** Always check the remaining lease length, ground rent terms (including any escalation clauses), and service charge history before buying a leasehold property, and get a solicitor experienced in leasehold conveyancing to review the lease terms carefully, since problematic clauses (like rapidly escalating ground rent) can significantly affect the property's future value and saleability.