What is the difference between Leasehold and Freehold?

When buying a property, one of the most important legal details to understand is whether it is leasehold or freehold. These terms describe the type of ownership you will have over the home and the land it stands on, and the difference can affect your costs, responsibilities and long term security. Knowing how each works can help you make a more informed decision before you buy.

What is Freehold?

Freehold ownership is the simplest and most complete form of property ownership. If you buy a freehold home, you own both the building and the land it sits on outright. This gives you full control over your property, subject only to planning laws and any local restrictions.

As a freeholder, you are fully responsible for maintaining the building, roof, gardens, boundaries and any shared access areas if applicable. There is no time limit on ownership, you own the property indefinitely.

Freehold is typically associated with houses, particularly detached, semi-detached and terraced homes. While there may still be estate management fees on modern developments, freehold homeowners generally have more independence and fewer ongoing legal obligations than leaseholders.

What is Leasehold?

Leasehold ownership is different. Instead of owning the property outright, you are effectively buying the right to live in the property for a fixed period of time, known as the lease. The land and building are owned by another party, called the freeholder or landlord.

Leases are usually granted for long periods, such as 99, 125 or even 999 years. However, as the length of the lease reduces, the value of the property often falls. Once the lease runs out, ownership legally returns to the freeholder unless the lease is extended.

Leasehold properties are most commonly flats, though some houses are also sold as leasehold, particularly in new developments.

Freehold means you own the property and the land outright, while leasehold means you only own the right to live in the property for a set number of years and the land remains owned by a freeholder.

Leaseholders normally pay:

• Ground rent: a yearly charge for occupying the land (often small, but can increase)
• Service charges: contributions towards maintenance, insurance and communal areas
• Administration fees: charges for alterations, permissions or selling the property

You may also need permission from the freeholder to make certain changes to the property, such as installing new windows, removing walls or keeping pets.

Maintenance and responsibilities

One key difference between freehold and leasehold is who takes care of repairs.

With freehold, all maintenance is your responsibility. With leasehold, the freeholder usually manages the building structure and shared areas and charges residents through service fees. While this can offer convenience, it also means you have less control over costs.

Service charges vary widely and can change each year. Leaseholders should always request past service charge accounts and future estimates to avoid unexpected bills.

Costs and value

Freehold properties often cost more upfront than leasehold, but they tend to hold their value better long term.

Leasehold properties are often cheaper to buy, but there may be ongoing costs such as ground rent and services. Properties with shorter leases (e.g. under 80 years remaining) may be harder to sell or mortgage and may require lease extensions.

Buying and selling considerations

Selling a freehold property is generally straightforward. There are fewer third party approvals needed and less legal complexity.

Leasehold sales often take longer due to additional documentation, management packs and consent requirements from the freeholder. Any disputes about service charges or management can also affect marketability.

Prospective buyers often scrutinise lease terms closely, including ground rent increases, remaining years on the lease and any restrictions on use.

Can you change from Leasehold to Freehold?

In many cases, yes. Leaseholders have legal rights to:

• Extend the lease
• Buy the freehold (known as enfranchisement)
• Take over building management jointly with other leaseholders

However, these processes can be expensive and legally complex, so professional advice is recommended.

If you want long term certainty, full control and no landlord involvement, freehold is usually preferable. If you’re buying a flat or want shared maintenance responsibilities, leasehold may suit you better, just be sure to understand the terms clearly.

Before purchasing any home, review the legal paperwork carefully, ask questions and seek advice from a qualified conveyancer.