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Leasehold vs Freehold: What Is the Difference and Why It Matters

Whether a property is freehold or leasehold is one of the most fundamentally important things to understand before you buy. The two tenure types come with very different rights, responsibilities, and long-term implications - and failing to understand the distinction can lead to significant costs and complications down the line.

Freehold

If you buy a freehold property, you own both the building and the land it sits on outright, indefinitely. There is no time limit on your ownership, no ground rent to pay, and no freeholder to answer to. You are responsible for all maintenance and repairs, but you are also free to make changes to the property (subject to planning permission and building regulations where applicable).

Most houses in England and Wales are sold freehold. If you are buying a house and the listing says "freehold," this is the straightforward, preferred tenure - you own it completely.

Leasehold

If you buy a leasehold property, you buy the right to occupy the property for a fixed term - the length of the lease. The land (and often the building itself, in the case of a block of flats) is owned by a freeholder (also called the landlord), and your rights and obligations as a leaseholder are set out in the lease document. The government summarises this as owning the property "for a fixed period of time," with ownership returning to the landlord when the lease ends (see the gov.uk leasehold property guidance).

Leaseholds are most common in flats, though some houses have historically been sold leasehold - a practice that has attracted significant regulatory attention. The Leasehold and Freehold Reform Act 2024 includes a ban on granting or assigning certain new long residential leases of houses, but leasehold reform is being phased in and not all provisions are yet in force - so always check the current gov.uk leasehold guidance for what applies at the time you buy.

Key Leasehold Considerations

Lease Length

New leases are typically granted for 99, 125, or even 999 years. The length of the remaining lease at the time you buy matters enormously. Mortgage lenders generally want a meaningful number of years left on the lease (the exact threshold varies by lender), and leases below 80 years tend to become more difficult and more expensive to extend. A lease that drops below 80 years is widely treated as a warning sign because the cost of extending it can rise substantially once it crosses this threshold - confirm the exact remaining term and any lender requirements with your solicitor and lender.

Ground Rent

Ground rent is an annual payment made by the leaseholder to the freeholder. Following the Leasehold Reform (Ground Rent) Act 2022, ground rent for most new residential long leases must be set at a peppercorn (effectively zero). However, many existing leases still carry ground rents - sometimes with doubling or escalating clauses that cause the rent to increase over time. Check the ground rent terms carefully for any leasehold property you are considering.

Service Charges

In a block of flats, the freeholder or a managing agent maintains shared areas and the building fabric, and recoups these costs through service charges. Service charges can vary significantly year to year depending on what work is carried out. They can be difficult to challenge even when they seem unreasonable, though leaseholders do have some legal protections (see the gov.uk guidance on service charges). Always ask for at least three years of service charge accounts before buying.

Major Works and Reserve Funds

Large building repairs - a new roof, cladding replacement, lift maintenance - can result in substantial one-off bills to leaseholders. A well-managed building will hold a reserve (sinking) fund to smooth these costs; a poorly managed one may issue demands for thousands of pounds with little notice. Ask whether a reserve fund exists and how healthy it is.

Freeholder Permission

Many leases require the freeholder's permission - sometimes accompanied by a fee - before the leaseholder can sublet, undertake alterations, or keep pets. Review the lease terms for any restrictions that would affect how you want to use the property.

Extending a Leasehold

Leaseholders in England and Wales have a statutory right to extend their lease. Under the current statutory regime, gov.uk states a qualifying leaseholder can add 90 years to a flat lease or 50 years to a house lease. The cost of a lease extension is calculated by a formal valuation and typically increases the shorter the remaining lease becomes - particularly below 80 years. Many buyers and their solicitors negotiate a lease extension as part of the purchase rather than waiting until they own the property.

Important: the rules on who qualifies and how extensions are calculated are changing. The Leasehold and Freehold Reform Act 2024 has already removed the previous two-year ownership requirement - that change commenced on 31 January 2025 (SI 2025/57), so you can extend or buy the freehold from the day you own the property. Other parts of the Act, including the 990-year extension term and the removal of marriage value, have not yet commenced. Do not assume any particular qualifying period or extension term applies - check the current gov.uk guidance and take advice from a solicitor before relying on the figures.

Commonhold

Commonhold is an alternative tenure to leasehold for flats - one where residents collectively own the freehold of their building through a commonhold association, rather than paying ground rent to an external freeholder. It remains relatively rare in England and Wales, and the government has signalled it intends to make commonhold a more widely used alternative to leasehold as part of ongoing reform. It is worth asking whether a new build flat development is being offered on a commonhold basis, and checking the current gov.uk guidance for the latest position.

Summary: Freehold vs Leasehold

This article is for general guidance only and reflects the position in England and Wales. Leasehold law is complex and subject to ongoing reform under the Leasehold and Freehold Reform Act 2024, much of which is being phased in. Always instruct a qualified solicitor to review the lease before buying a leasehold property, and check the current gov.uk leasehold guidance.

Last reviewed: 14 June 2026. This is general information, not legal advice - leasehold reform is changing; always check the current gov.uk guidance.