Freehold vs Leasehold: What's the Difference?

Freehold and leasehold describe two different ways of owning property in England and Wales. The difference affects what you own, what you pay each year and what you can do with the property, so it is worth understanding before you make an offer.

What freehold means

If you buy a freehold property, you own the building and the land it stands on outright and for an unlimited period. There is no landlord, no ground rent and no lease to comply with. Most houses in the UK are sold freehold.

Freehold ownership is generally the simpler of the two. You are responsible for maintaining the whole property, including the roof, structure and boundaries, and you do not need anyone's consent to make most changes, subject of course to planning permission and building regulations.

What leasehold means

If you buy a leasehold property, you own the right to occupy it for a fixed number of years set out in a lease. The land, and usually the structure of the building, belongs to the freeholder. Most flats are leasehold, because a building containing several homes needs someone responsible for the shared parts.

As a leaseholder you will usually pay ground rent to the freeholder and a service charge towards the upkeep of the building and communal areas. The lease will also contain covenants: obligations about what you can and cannot do, such as restrictions on pets, subletting or alterations.

The things we check on a leasehold purchase

• How many years are left on the lease, and whether that will affect your mortgage or a future sale
• The level of ground rent and how it increases over the term
• Service charge history and any large works planned or anticipated
• Whether the building has any outstanding safety or cladding issues
• Whether the freeholder or managing agent is responsive and well run

Does a short lease matter?

Yes. Leases below around 80 years become significantly more expensive to extend, and many lenders are reluctant to lend on them. If the property you are buying has a short lease we will tell you early, explain the likely cost of extending and, where appropriate, help you negotiate on price or arrange for the seller to start the extension process.

Which is better?

Neither is inherently better. A well-managed leasehold flat with a long lease and sensible service charges can be an excellent purchase. A freehold house comes with more freedom but also full responsibility for maintenance. What matters is understanding exactly what you are buying, which is precisely what your conveyancing solicitor is there to tell you.