Leasehold vs freehold: what’s the difference?
Quick answer
- Freehold: you own the building and the land, with no time limit. Most houses.
- Leasehold: you own the right to live there for a set number of years. Most flats.
- With leasehold, check the lease length, ground rent and service charges.
This guide covers England and Wales.
What is freehold?
You own the property and the land outright. You are responsible for repairs. Some newer estates also charge estate fees for shared areas.
What is leasehold?
You own a lease for a fixed number of years. The freeholder (landlord) owns the building. The lease sets out who repairs what and what you can do.
What to check before buying leasehold
Lease length
Short leases can make a property harder to mortgage and sell, and costlier to extend.
Short leases
Many lenders have minimum lease lengths. Check the remaining years before you make an offer.
Ground rent
A yearly payment to the freeholder. Check whether it can increase. For most new residential leases since mid-2022, ground rent is zero.
Service charges
Your share of building costs. Ask for recent accounts, planned major works and any reserve fund.
Restrictions
Check rules on subletting, pets and alterations.
Is leasehold law changing?
Yes. The Leasehold and Freehold Reform Act 2024 is being brought in in stages. Your lawyer will advise on the current position.
Share of freehold
Some flats come with a share of freehold, giving owners more control over the building.
FAQs
Is leasehold bad?
Not necessarily. Most flats are leasehold. The key is a long lease and reasonable charges.
Can I extend my lease?
Usually, yes, if you meet certain conditions. Costs and rules depend on the lease and the law at the time.
Can I buy the freehold?
Often, yes, sometimes together with other flat owners.
Buying a flat or house?
We review the lease and explain it in plain English before you commit. See our conveyancing services or contact us.
This article is general information about the law at the date of publication. It is not legal advice and should not be relied on for your situation. The law and Home Office or court procedures may change. Please contact us for advice on your circumstances.
