Leasehold vs freehold – what’s the difference?

Leasehold and freehold are different types of property ownership in the UK. These differences can affect your legal rights and how you buy or sell a home.​

The headlines

  • A freehold property means you own the building and the land it’s built on.​
  • A leasehold property means you own the property for a set length of time, but not the land it's built on.​
  • If you’re buying a home, the property listing will usually state whether it’s freehold or leasehold.

In this guide

What is a freehold property?

What is a leasehold property?

What's the difference between freehold and leasehold?

Is a freehold better than a leasehold?

Things to consider when buying a leasehold property

How to check if a property is freehold or leasehold

Frequently asked questions

What is a freehold property?

A freehold property means you have complete ownership of the building and the land it sits on. For example, a freehold house includes the building itself as well as the surrounding gardens, garage and grounds. ​

If you own a freehold, you are responsible for caring for the entire property, including all maintenance, repairs and insurance. You're also free to make changes if you have the necessary planning permission from the local authority.

There is no limit to how long you can own a freehold property.

What is a leasehold property?

A leasehold property means you own the property for a set period, but not the land it's built on. This is most common with flats and some new-build houses with shared-ownership agreements. 

Lease terms are usually fixed at 99, 125 or 999 years. The lease does not renew when the property is sold but continues to count down. The longer the lease left the better, as some lenders may not offer a mortgage if it falls below a certain number of years left.  Once the lease ends, the property returns to the landowner, known as the freeholder. 

Leasehold agreements create a contract between the leaseholder and the freeholder that outlines everyone's responsibilities. ​

For the leaseholder, these might involve.​

  • Paying certain yearly costs such as ground rent​.
  • Monthly service charges that go towards repairs and maintenance.​

The freeholder is then responsible for:​

  • the roof and exterior of the property​
  • common areas in a block of flats, such as the entrance hall and staircase.​

Some leaseholders may exercise their 'right to manage'. This allows them to take control of the building’s maintenance.

What's the difference between freehold and leasehold?

Freehold property

Benefits

  • No lease – Saves you the hassle of keeping track of a lease and the extra cost of extending it.
  • Flexibility – You're free to carry out home improvements, with permission from the local authority. You can also keep pets in the property.
  • No charges – You don't have to worry about extra charges such as admin fees, service charges, or ground rent.
  • Full ownership – You have complete ownership of the property and the land on it as long as you meet your mortgage payments.

Feehold property

Things to consider

  • Maintenance costs – You'll be responsible for maintenance and upkeep of the property and paying for building's insurance.​
  • Limited building types – Most freehold properties are houses, so if you want to buy a flat, you may find it harder to find one.​
  • Purchase price – The asking price for a freehold property can be higher up front than a leasehold.
  • Extra charges – Usually, there is no ground rent. But some new-build freehold homes may have an estate charge or fee that covers the maintenance of shared areas, such as parks and green spaces.
  • Restrictive covenants – These are agreements written into property contracts. Full ownership could still come with restrictions that might limit how you can alter your home and the land. 

Leasehold property

Benefits

  • Cheaper – Leasehold properties can be cheaper up front compared to freehold.​
  • Fewer responsibilities – Maintenance, repairs and other responsibilities for the building usually lie with the freeholder.​
  • No building's insurance – The freeholder often arranges and pays for the building's insurance, so this is usually already covered. Check your lease to make sure.​
  • Extra amenities – Some leasehold properties offer access to shared amenities, such as gardens, fitness centres and lounge areas. They may also have enhanced security, such as a concierge or CCTV.

Leasehold property

Things to consider

  • Restrictions – The freeholder may have restrictions such as no pets, home improvements, or running a business from your home.
  • Selling and remortgaging – Selling or remortgaging a leasehold property with a short lease can be difficult, especially if the lease has less than 80 years left.
  • Rent and service charges – On top of your mortgage, you may have to pay ground rent and extra service charges for maintenance and upkeep.
  • Limited ownership – With a leasehold, you only own the lease, rather than exclusive ownership of the land and property it sits on.
  • Long-term costs – While the upfront cost of the property can be cheaper, long term can work out more expensive when you add in other charges.

Is a freehold better than a leasehold?

Leasehold and freehold properties suit different needs and circumstances. Freehold ownership is usually simpler and more flexible, but properties might be more expensive to buy.​

Leaseholds are often cheaper and involve less maintenance, but they have some restrictions – both in terms of control and property type. It all comes down to what you can afford and the type of home you want to buy.​

Before choosing to buy a freehold or leasehold property, you might want to factor in:​

  • your budget​
  • the location (city centre, outskirts, countryside)​
  • the type of property (flat, house)​
  • your mortgage eligibility.

Things to consider when buying a leasehold property

Length of the lease

The length of the lease can affect the value of a property. As the lease term goes down over time, this can make a property less desirable. You could struggle to get a mortgage if there’s less than 70 years left on the lease.

Extending the lease

Leasehold property owners can ask to extend the lease at any time. Qualifying tenants who own their home for 2 years can extend their lease by 90 years for a flat, or 50 years for a house.​

Qualification is usually based on having an original lease for more than 21 years. The cost of extending your lease will depend on the type of property. If you can't come to an agreement with the freeholder, you can appeal.

Charges on leasehold properties

Freeholders are usually responsible for the maintenance and repair of the building – normally through a monthly service charge. They may also need to pay into a fund to cover unexpected repairs or maintenance.​

This is unless leaseholders exercise their ‘right to manage’ or pass responsibility to a third party.

Getting a mortgage or reselling the property

Lenders might consider a lease with less than 70 years to be risky. This could make it difficult to get a mortgage as a buyer or sell as an owner. A lease with 100+ years usually means more market value.

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  • Share of freehold means you only own part of the freehold, rather than the whole property. This usually applies when buying a freehold flat rather than a house.

    A share of a freehold could give you more control over your property than a leasehold, as you’ll be directly involved in making decisions about the property and land. If a freehold is split among lots of shareholders, any decisions must be made as a group before they happen.

    Not all lenders have the same criteria for freehold mortgages, so be sure to check before buying the property.

  • A flying freehold is where all or part of a property crosses over another property or piece of land. This might include:

    • your neighbour’s balcony hanging over your property
    • a cellar or basement running beneath another property
    • where there are archways​ between 2 buildings
    • rooms built across passageways​.

    It’s wise to check whether a property has a flying freehold before you apply for a mortgage, as it could come with extra risks.

  • You might be able to buy the freehold of your leasehold flat. You’ll need to ask your landlord to buy a share of the freehold. You can do this through an informal negotiation or by taking legal action – known as a collective enfranchisement. ​

    If your landlord wants to sell the building anyway, they will usually offer you and other leaseholders the chance to buy it first. This is your right of first refusal. ​

    Buying the rights to your freehold flat – or even just a share – can be difficult. You might have to pay more if you already have a long lease. But you could end up saving on lease extensions and even add extra value to the property.

  • When a leasehold ends, ownership returns to the freeholder. The leaseholder must leave the property, unless they arrange to extend the lease. Leaseholders can also choose to buy the freehold through a process called enfranchisement.

  • Yes, you’ll still own your house if it’s a leasehold property. But you’ll only own it for the length of the lease and you do not own the land it’s built on. Once the lease ends, ownership of the house returns to the landlord – unless you can reach an agreement to buy the freehold.

  • You can only be asked to leave a leasehold property in certain circumstances. These include:

    • the lease term coming to an end and the property returning to the landlord
    • the leaseholder breaching a term of the lease.

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