Comparison · Property 2025
Leasehold vs Freehold
The single biggest property ownership distinction in England, Wales and Northern Ireland. Most houses are freehold; most flats are leasehold. The difference affects what you actually own, what you pay annually, and how saleable the property is.
TL;DR — 30 Second Answer
- • Freehold: you own the land + building forever — no fees
- • Leasehold: you rent the building for a fixed term (typically 99-999 years)
- • Always prefer freehold; only buy leasehold with 100+ year lease and check service charges
- • 2024 reform banned new leasehold houses, capped new ground rents at £0
Side-by-Side
| Feature | Freehold | Leasehold |
|---|---|---|
| Own the land? | ✅ Yes | ❌ No — freeholder owns it |
| Duration | Forever (perpetuity) | Fixed term (typ. 99-999 years) |
| Ground rent | £0 | £0-£500/yr (banned for new 2022+) |
| Service charges | None | £1,000-£5,000/yr typical (flat) |
| Building maintenance | You arrange + pay | Freeholder/management does |
| Need permission for alterations? | No (planning only) | Yes — freeholder consent |
| Insurance | You arrange | Building insurance arranged by freeholder |
| Pets / sublet rules | Your choice | Lease restrictions apply |
| Sale difficulty | Easy | Harder if lease < 80 years |
The 80-Year Trap
Once a lease drops below 80 years, «marriage value» kicks in — the cost of extending the lease rises sharply (often £10,000-£50,000+ for a flat). Mortgage lenders also become reluctant: many require 70-80 years remaining at end of mortgage term. So a 25-year mortgage on a property with 85-year lease is tight. Always check lease length before offering. The 2024 reform makes extensions easier and cheaper, but rules haven\'t fully activated as of 2025 — get latest position from solicitor.
Service Charges & «Cladding Crisis»
Service charges cover building upkeep — communal lighting, cleaning, lift maintenance, reserves. Typical £1,000-£3,000/yr for flat. But post-Grenfell (2017), many leaseholders in tall buildings faced massive cladding remediation charges (£10,000-£50,000+) — Building Safety Act 2022 limits liability for qualifying leaseholders. Always:
- Ask for last 3 years\' service charge accounts
- Check reserve fund balance
- Ask about planned major works (Section 20 notices)
- Building over 11m? Ask about EWS1 form (cladding safety)
Alternatives to Pure Leasehold
- Share of Freehold: All leaseholders in a block jointly own the freehold via a management company. Best of both worlds — flat-living with collective control.
- Commonhold (UK 2022+): A new tenure type — flat-owners collectively own building forever, no leasehold needed. Rare so far but expanding from 2024 reform.
- Right to Manage (RTM): Leaseholders can take over management of the building from a freeholder without buying freehold. Useful when freeholder is unresponsive.
- Scotland: Uses different system entirely. «Heritable» property = freehold-equivalent (perpetual). «Long lease» exists but rare since 2012 reform.
Buying Leasehold? Checklist
- Get a copy of the lease document — read entirely (use solicitor).
- Note lease length remaining. < 100 yrs = red flag. < 80 yrs = avoid unless price-discount + extension built into completion.
- Check ground rent: amount + frequency + review clauses (escalating ground rent is mortgage-killer).
- Get 3 years\' service charge accounts. Look for spike patterns.
- Ask about Section 20 notices (planned major works).
- Check the freeholder + management company online — known disputes? Companies House filings?
- Building over 11m: EWS1 form for cladding safety.
- Pet/sublet restrictions if relevant.
- Get mortgage offer before committing — many lenders reject < 80-year leases.