Freehold vs leasehold: what is the difference?Freehold means you own the property and the land it stands on outright, with no time limit on your ownership. Leasehold means you own the right to occupy the property for a fixed period (the lease term) but do not own the land — a freeholder (landlord) retains ownership of the land and often parts of the building. Freehold: you own the building and land indefinitely. Leasehold: you own the right to occupy for a set term. Most flats are leasehold. Most houses are freehold, though leasehold houses exist and are generally less desirable. Key differences at a glance
What is a lease term and why does it matter?A lease term is the number of years remaining on the lease. New leases are typically 99, 125, or 999 years. As years pass, the remaining term falls. Lenders have strict requirements — most require at least 70 to 85 years remaining when you apply for a mortgage, meaning a lease below 80 to 85 years can make the property difficult to mortgage or sell.
What are ground rent and service charges?
Can you extend a lease?Yes. Leaseholders who have owned their property for at least 2 years have a statutory right to extend their lease by 90 years on top of the existing term, at a peppercorn (zero) ground rent. The cost depends on the property value, current ground rent, and remaining lease term. Professional valuation is essential before extending. Can you buy the freehold?Flat owners can collectively buy the freehold from the landlord (called collective enfranchisement) if at least 50% of the flats in the building participate. House leaseholders have the right to buy their freehold individually. Both processes are complex and require specialist solicitors. Verdict Always check the lease term and charges before buying leasehold A short lease, high service charges, or escalating ground rent are all material risks that affect value and mortgageability. Always obtain the full lease, last 3 years of service charge accounts, and a solicitor review before exchanging on a leasehold property. Frequently asked questionsIs freehold always better than leasehold? For houses, yes — there is rarely a good reason to buy a leasehold house. For flats, leasehold is standard and unavoidable. The key is checking the lease term, ground rent, service charges, and the quality of the freeholder management. What is commonhold? Commonhold is an alternative to leasehold for flats where residents collectively own the freehold of the building. It eliminates ground rent and some leasehold management issues. It is rare in the UK but the government has been consulting on expanding its use. How much does a lease extension cost? Costs vary widely. A rough guide for a flat worth £250,000 with 80 years remaining: premium to the freeholder £5,000 to £15,000 plus legal and valuation fees of £2,000 to £5,000. Costs rise significantly as the lease term falls below 80 years. Can you get a mortgage on a short lease property? Most lenders require at least 70 to 85 years remaining on the lease at the time of application (some lenders require the lease to have 70 years after the mortgage term ends). A lease with under 70 years remaining will be difficult to mortgage. |
Freehold vs Leasehold UK: What Is the Difference? 2026
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