If you’re buying a property in England or Wales, one of the first things you’ll come across is whether the property is freehold or leasehold. This distinction affects what you own, what you pay, and what you’re responsible for.
For many buyers, especially first-time buyers, this can feel confusing, but understanding the difference is essential before you commit to a purchase.
In this guide, we explain the key differences between freehold and leasehold properties, outline the pros and cons of each, and highlight what you should look out for.
Table of Contents
- Table: Key Differences Between Freehold and Leasehold
- Freehold Property Definition
- Leasehold Property Definition
- Lease Length
- Extending a Lease
- Service Charges & Ground Rent
- Commonhold Explained
- Share of Freehold Explained
- FAQs
A Summary of Key Differences Between Freehold and Leasehold
| Feature | Freehold | Leasehold |
| Ownership | Own the property and the land outright | Own the property for a fixed term |
| Duration | Unlimited | Fixed lease term (e.g. 99, 125, 999 years) |
| Ground Rent | None | Usually payable |
| Service Charges | Rare (except some estates) | Common, especially for flats |
| Control | Greater freedom | Subject to lease restrictions |
| Conveyancing | Often simpler | Usually more complex |
What is a Freehold Property?
When you buy a freehold property, you own the property outright, including both the building and the land it stands on. There is no time limit on ownership, and you are not leasing the property from anyone else.
Legal Rights as a Freeholder
Freehold ownership often offers greater control and fewer ongoing costs, but there are still some points to be aware of:
- No ground rent. You won’t need to pay ground rent, which can be costly with leasehold properties.
- Usually no service charge. Although some freehold homes on modern estates may require a maintenance fee for communal areas such as roads, gardens, play areas or lighting.
- You are responsible for maintenance. Including the roof and structure, so it’s important to budget for repairs and upkeep.
- Fewer legal obligations. Although there may still be restrictions on the title, such as only using the property as a private home for one family.
The Conveyancing Process for a Freehold Property
The conveyancing process for a freehold property is often more straightforward than for a leasehold. There is no lease to review and usually fewer third parties involved, which can help reduce delays.
Key tasks include:
- title checks
- searches
- contract review
- completion and registration
What is a Leasehold Property?
A leasehold property means you own the property for a fixed period of time, known as the lease term, but not the land or building outright. Instead, you lease it from the freeholder (also known as the landlord).
Leasehold arrangements are most commonly used for flats, although some houses are also sold as long leasehold.
Rights, Responsibilities and Restrictions of a Leasehold
If you are buying a leasehold property, it is essential to read the lease carefully. The lease sets out your rights and responsibilities, as well as any restrictions that apply.
These may include:
- How the property can be used
- Whether pets are allowed
- Rules on alterations or sub-letting
- Your obligation to contribute towards maintenance and insurance
It’s important to ensure the lease terms suit your lifestyle and future plans for the property.
Understanding the Length of the Lease
The length of the lease is one of the most important factors when buying a leasehold property.
- Houses are often sold with very long leases, sometimes up to 999 years
- Flats usually have shorter leases, commonly 250, 150, 125 or 99 years
The 80 Year Rule
If a lease has less than 80 years remaining, you may struggle to get a mortgage and the property may be harder to sell. While leases can usually be extended, the cost can be significant if left too late. In some cases, you may also have the right to purchase the freehold.
Extending a Leasehold
Most leaseholders have a legal right to extend their lease, provided certain conditions are met.
Costs can include:
- the premium payable to the freeholder
- valuation fees
- legal fees (both yours and the landlord’s)
The cost usually increases as the remaining lease length decreases.
Under the Leasehold and Freehold Reform Act 2024, statutory lease extensions are set to increase to 990 years, significantly improving long-term security for leaseholders.
Service Charges and Ground Rent
For leasehold flats, the landlord or management company is usually responsible for maintaining communal areas, the main structure of the building and arranging buildings insurance.
In return, leaseholders typically pay:
- Service charges, often monthly or quarterly
- Ground rent, usually paid annually
It is important to keep these payments up to date. If ground rent or service charges are not paid, the landlord may take legal action and, in serious cases, apply to court to end the lease.
Additional Leasehold Fees to Consider
When buying or remortgaging a leasehold property, there may be additional fees payable to the landlord or management company. These can include:
- Notice fees
- Deed of covenant fees
- Management information fees
The costs vary between landlords and management companies and are usually confirmed during the transaction.
What About Commonhold and Share of Freehold?
What Is Commonhold?
Commonhold allows flat owners to own their property outright while jointly managing shared areas. It avoids many leasehold issues but remains relatively rare.
What Is Share of Freehold?
A share of freehold means leaseholders jointly own the freehold of the building, alongside their individual leases. This often gives greater control over management decisions.
Final Thoughts
Choosing between a freehold and leasehold property can affect your costs, responsibilities and long-term plans. Understanding the differences will help you make an informed and confident decision.
Our residential conveyancing experts advise on both freehold and leasehold transactions and will guide you through every step. Get in touch today via our form.
FAQs
Leasehold is not inherently bad. Many people live happily in leasehold properties. Issues tend to arise where leases are short, service charges are high, or terms are unclear. A well-managed lease with a long term can be perfectly suitable depending on the inhabitant’s priorities and wishes.
Yes. Leasehold properties can be sold in the same way as freehold properties. However, the length of the lease and ongoing costs may affect buyer interest and mortgage availability.
If a lease has less than 80 years remaining, the cost of extending it can increase significantly, and mortgage lenders may be more cautious. This can make the property harder to sell.
Yes. Most leaseholders have a legal right to extend their lease, provided certain conditions are met. Lease extensions improve long-term security and can make a property more attractive to buyers and lenders.
The cost depends on factors such as the remaining lease length and the value of the property. Costs usually include a premium payable to the freeholder, valuation fees, and legal costs for both parties.
If a lease expires, ownership of the property reverts to the freeholder. In practice, leases are almost always extended or enfranchised well before expiry, as mortgage lenders do not usually lend on short leases.
Yes. Leaseholders can challenge service charges if they believe they are unreasonable or not properly incurred, using the appropriate legal process. Recent governments reforms have looked to increase the transparency of service chargers for leaseholders.
Yes. Some freehold homes on modern estates may require contributions towards shared areas such as roads, lighting or communal green spaces.
Currently, ground rents on most new long residential leases are already set to a peppercorn (effectively £0) thanks to the Leasehold Reform (Ground Rent) Act 2022. The Labour government in January 2026 announced further proposals to cap ground rent at £250, which after 40 years would switch to a £0 value peppercorn charge. This is not due to be passed into law until around 2028.
Neither is automatically better. Freehold offers greater control and fewer ongoing costs, while leasehold can suit certain properties and locations. The right choice depends on your circumstances and the specific terms involved.
Sarah Barnes | Partner, Head of Residential Conveyancing
Sarah Barnes is a partner and head of the residential conveyancing team, based in the firm's Preston office
Sign up for legal insights
Stay up to date with the latest alerts, training and event invitations.
