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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 the UK 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.

Leaseholds are most common in flats, though some houses have historically been sold leasehold — a practice that has attracted regulatory attention in recent years and is being phased out for new builds.

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. Most mortgage lenders will not lend on leases with fewer than 70–85 years remaining (the exact threshold varies by lender), and leases below 80 years become increasingly difficult and expensive to extend. A lease that drops below 80 years is particularly significant because the cost of extending it increases substantially once it crosses this threshold.

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 new residential leases must be set at a peppercorn (effectively zero). However, many existing leases still carry ground rents — sometimes with doubling clauses that cause the rent to increase significantly 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. 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 by 90 years (for flats) or 50 years (for houses) at a zero peppercorn ground rent, providing they have owned the property for at least two years. The cost of a lease extension is calculated using a formal valuation and typically increases significantly 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.

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 is relatively rare in the UK but is being promoted by the government as a preferred alternative to leasehold. It is worth asking whether a new build flat development is being offered on a commonhold basis.

Summary: Freehold vs Leasehold

This article is for general guidance only and reflects the position in England and Wales as of early 2026. Leasehold law is complex and subject to ongoing reform. Always instruct a qualified solicitor to review the lease before buying a leasehold property.