Leasehold vs Freehold: Key Differences Explained

The difference between leasehold and freehold is important to understand. It can impact everything from your legal rights, responsibilities, control and costs to resale value. Here's what you need to know.

leasehold vs freehold: The difference explained

Leasehold vs freehold

There are two fundamentally different forms of legal ownership: freehold and leasehold.

FreeholdLeasehold
You own the property and the land it’s built onYou own the property for a fixed period but not the land
Ownership is indefiniteThe lease has a fixed term, such as 99 or 125 years
You’re responsible for maintenance and upkeep of the propertyYour freeholder is responsible for maintenance. You’ll pay for this via your service charge. You may have to pay ground rent too.
Typical for housesTypical for flats
You must arrange your buildings insuranceBuildings insurance usually arranged by freeholder

What is a freehold property?

Owning a freehold property means that you own the building and the land it stands on outright, in perpetuity.

Houses are usually freehold. Although there are some leasehold houses, jump to more on this. So check the tenure of your property before you buy.

Freehold is pretty much always the preferred option: you can’t really go wrong if you buy freehold. Although owning the freehold means you’ll be responsible for maintaining you property. So you’ll need to factor that into your budget.

What is a leasehold property?

Leasehold means to own a property for a fixed amount of time, leasing it from a landlord who owns the whole building and the ground it sits on.

Leases are usually long term – often 90 years up to 999 years. But you may see much shorter leases, such as 40 years.

When the lease expires, the property goes back to the freeholder. However, you can usually extend the lease.

While the ideal situation would be to own a freehold property, if you’re looking to buy a flat in England and Wales then it is 9 times out of 10 likely to be sold as a leasehold.

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Pros & cons of leasehold vs freehold

Pros of buying a freehold property

  • Your ownership is indefinite, with no time limit.
  • You don’t need to pay leasehold charges like service charge or ground rent (Jump to more on these)
  • There’s no freeholder to deal with
  • There’s no risk of a freeholder failing to maintain the building
  • You have full control over what you do with your home

Disadvantages of buying a leasehold property

  • You’ll need to pay leasehold charges such as a service charge to the freeholder
  • You may need to pay ground rent to the freeholder too
  • Leaseholders will have to obtain permission for any majors works done to the property
  • There may be other leasehold restrictions, such as not owning pets or subletting
  • Once the lease falls below 80 years, extending it becomes costly and the property can lose value
  • If the property you buy develops unexpected issues such as cladding, then it may become costly and difficult to sell

Is leasehold bad?

Buying a leasehold property has a number of drawbacks but leasehold properties are common – they are usually flats – with 19% of English housing stock consisting of leasehold properties, according to government data. And many people own and live happily in leasehold flats.

As with most things, the devil is in the detail. The key is to know what you’re looking for – read on for more on this.

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Why is the lease length important?

When you buy a freehold property, you’ll own it in perpetuity. But this isn’t the case with leasehold properties. It’s crucial to find out how long the lease is because if a lease is less than 85 years you’ll typically struggle to get a mortgage.

And once a lease drops below 80 years, it’s considered a short lease and is a problem under current rules because the lease extension process suddenly gets more expensive. This is because once your lease is below 80 years, when you extend your lease, you must pay half of the amount the property will increase in value by due to the longer lease. This is known as marriage value.

The Leasehold and Freehold Reform Act 2024 abolished marriage value but this has yet to come into effect and is currently being challenged in court. Find out more in our guide on leasehold reforms. So the existing rules on marriage value currently stand.

A short lease will also make it harder for a future prospective buyer to get a mortgage, as many lenders won’t lend on flats with a lease already below the 80-year mark.

How the lease extension process works

  • The cost of extending your lease will depend on your property’s value, how long is left on your lease and the amount of ground rent you pay.
  • To get an idea of how much it may cost you to extend your lease, use our free handy leasehold extension calculator powered by the Government-funded Leasehold Advisory Service.
  • When you extend your lease, you’ll also need to pay professional fees like solicitor costs and valuation fees – for you and the freeholder.
  • Leasehold reform could make it cheaper – or more expensive – to renew your lease. And the standard lease extension will increase to 990 years for houses and flats (up from 50 years in houses and 90 years in flats). But these reforms have not yet come into force.
  • If you are a leaseholder considering whether to extend your lease or wait, you should seek advice from a leasehold specialist. You can get a free initial consultation and estimate from our leasehold specialist partners.

Can I turn my leasehold into a freehold?

  • Leaseholders of flats have a joint right, with other flat-owners in the block, to buy the freehold of their building. This is known as a right of “freehold enfranchisement” and it means that the leaseholders become their own freeholder.
  • Buying the freehold isn’t something you can do on your own – you have to get your neighbours involved too. The law allows at least half of the leaseholders to come together to buy the freehold of the block from the freeholder/landlord. 
  • While if you own a freehold house, you have a legal right to force your freeholder to sell you the freehold of your home. For more details, see our advice guide Should I buy the freehold?
  • It’s advisable to get expert advice on whether now is a good time to buy your freehold.

How much does buying a share of freehold cost?

In terms of costs to buy your share of the freehold you will need to pay your flat’s share of:

  • The purchase price for the freehold (the premium).
  • The cost of a valuation surveyor to do an accurate freehold valuation so you avoid paying over the odds.
  • Legal fees for the leaseholders and freeholder’s legal and valuation fees.
  • Stamp duty land tax (if the purchase price is over £125,000).

Considering buying a share of a freehold? Our partnered solicitors can give you a free estimate and provide advice you can rely on. Enquire now.

Declining value of leasehold properties

All other things being equal, the shorter the lease, the less it is worth. The value of long leases stays fairly stable, but under the current system, the value of short leases can drop rapidly.

  • Case study example, if you buy a flat with a lease of 60 years, it will be worth less than 90% than if it had a lease of 99 years. For example, you might think a flat is worth £200,000, but actually it is worth less than £180,000. The difference is the value owned by the freeholder. 

What happens when a lease expires?

When the term of the lease drops to zero years, the leasehold expires and the property reverts to the freeholder.

  • For example, if you have a 40 year lease, you only have the right to use the property for 40 years before it goes back to the freeholder.

However, in reality, most leases don’t expire because they are extended well before the lease runs out. But this doesn’t happen automatically. So it’s important to find out how long is left on your lease and take action, if required. Read What happens when a leasehold expires?

Get expert advice on whether now is a good time to extend your lease or buy your freehold

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Get expert advice on extending your lease, buying your freehold or applying for the right to manage.

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Common leasehold charges

Unlike if you buy a freehold property, buying a leasehold property involves paying additional costs. There are three types of leasehold charges: 

Ground rent

  • Ground rent is a fee paid by a leaseholder to the freeholder for the right to occupy the land their property is built on.
  • The lease may contain a clause allowing the landlord to increase rent in years to come. Depending on how much the ground rent will increase by and how this is calculated it can cause problems buying, remortgaging and selling the leasehold property.
  • The Leasehold Reform (Ground Rent) Act 2022 banned ground rent on most new leases granted from 30th June 2022, setting it at a nominal ‘peppercorn’ rate i.e. £0. But this only applies to leases created after that date. For retirement properties, ground rent was banned from 1st April 2023.
  • For leases created before that date, if you were to carry out a statutory lease extension, your ground rent will also be reduced to a peppercorn, i.e. £0. See our guide to ground rent for more information.

Buying a leasehold property? Make sure you use an experienced conveyancer. Compare conveyancing quotes from regulated and reviewed conveyancing solicitors that cover your area.

Service charges

  • Leasehold service charges normally vary according to the amount that is spent by the Lease Administrator each year on the upkeep of the building as a whole. 
  • This includes, for example cleaning common areas, making repairs, such as painting the building or replacing the roof and may include buildings insurance, though, sometimes this is quoted separately.
  • You should ask your conveyancing solicitor what items you will need to pay for. Check whether the lease administrator has any plans for expensive works for which you will be responsible. And, when payment for these will be due.
  • See our guide on leasehold service charges for more advice on what to expect and what to do if problems arise.

Administration charges

However, whether you buy a freehold or leasehold property, you may need to pay estate management charges for the upkeep of shared spaces.

What happens if I don’t pay leasehold fees?

  • If leaseholders don’t fulfil the terms of the lease – for example, by not paying the fees – then the lease can become forfeit. This means the landlord can terminate the lease and reclaim possession.
  • However, further reform of the leasehold and commonhold system over the course of the current Parliament has been set out, including commitments to removing the ‘disproportionate and draconian threat of forfeiture as a means of ensuring compliance with a lease agreement’. Find out more in our guide to Leasehold Reform.

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Are houses leasehold or freehold?

Houses should always be freehold.

But leasehold houses do exist. We called for a ban on the sale of new build houses as leasehold in our 2017 report Homes Held Hostage. Later that year, the government pledged to introduce the changes.

Most developers took this pledge seriously and stopped selling new houses as leasehold. The proportion of new build leasehold houses rose from 7% in 1995 to a peak of 15% in 2016, down to less than 1% in December 2022. The Leasehold and Freehold Reform Act 2024 finally sets that commitment in stone by including a ban on the sale of leasehold houses in England and Wales (other than in exceptional circumstances).

Leaseholders and freeholders disputes

It is common to have tension between freeholders and leaseholders. Such as:

Service charge disputes

The Property Ombudsman said it received 6,649 enquiries about residential leasehold in 2024, a 67% year-on-year spike with many homeowners concerned about the fairness of service charges, which in most cases must be redirected to a court or tribunal.

Absent freeholders

An absent freeholder can also cause problems, including issues if you want to extend your lease or buy the freehold, to selling your property down the line. Read more in our guide to Absent freeholder problems

Freeholder complaints

Freeholders complain leaseholders breach the terms of their lease. For example, by making too much noise or not getting permission for building works.

Leasehold vs commonhold explained

Commonhold was introduced into the UK under the Commonhold and Leasehold Reform Act 2002. However, according to Matthew Pennycook, Minister of State for Housing and Planning, ‘for a variety of reasons it failed to establish itself and is now out of date.’

The government’s White Paper which was published in March 2025 intends ‘to reinvigorate commonhold through the introduction of a comprehensive new legal framework based on the vast majority of the recommendations made by the Law Commission in their 2020 report. This new legal framework will be supplemented by a ban on the sale of new leasehold flats, so that commonhold becomes the default tenure.’

How does commonhold work?

Commonhold provides freehold ownership for flats and other interdependent buildings. This means you’ll own the property indefinitely unlike leasehold where you’ll own it for a fixed period.

You’ll share ownership of the communal areas through a commonhold association, which all unit-owners are members of and jointly control.

Instead of having a lease there will be a Commonhold Community Statement, that defines the rights, responsibilities, and rules for all unit owners. This is a set legal framework that cannot be altered. Bookmark our page on Leasehold Reform to stay up to date on this.

Get expert advice on lease extension, buying the freehold and Right to Manage from our partner leasehold specialists

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Frequently Asked Questions

Is it better to have freehold or leasehold?

Freehold is pretty much always the preferred option. With freehold, you own the building and the land it stands on indefinitely. But with leasehold, you own the property, not the land, and only for the length of your lease agreement with the freeholder. Plus, you’ll need to pay leasehold charges too.

Why would anyone buy a leasehold property?

There are lots of downsides to buying a leasehold property, but if you’re buying a flat, you’ll probably find most of the flats on the market are leaseholds. The key is to be fully aware of the length of lease, any leasehold charges and any other important factors that your conveyancer should flag to you. Read more in our guide on Buying a leasehold property.

Is my house freehold or leasehold?

To find out whether your house is freehold or leasehold, you should check your deeds. Alternatively, you can search for your property at the Land Registry.

What is flying freehold?

A flying freehold is a freehold property built over land that doesn’t form part of the property, such as if a freehold property overhangs another. For example, this could include rooms built across passageways or basement vaults.

Related Reads

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