Leasehold is a form of property ownership where a buyer owns the right to live in a property for a fixed number of years under a lease, but not the land it sits on. The freeholder retains ownership of the land and building.
In one line: Leasehold gives ownership of a property for a set term, while the freeholder keeps the land.
How leasehold works
Leases commonly run for 99, 125 or 999 years and reduce over time. A short remaining lease can lower a property's value and make mortgages harder to obtain, which is why owners often extend the lease.
A flat with 85 years remaining might cost several thousand pounds to extend, while one with 70 years could cost considerably more because it nears the point where extension becomes costly.
Leaseholders usually pay ground rent and a service charge to the freeholder and must follow the lease terms on alterations, subletting and pets.
Leasehold vs freehold
Leasehold means owning the property for a fixed term but not the land, with ongoing charges to a freeholder. Freehold means owning both the property and the land outright with no lease term.
Flats are typically leasehold, while most houses are freehold. Recent leasehold reform has made extending a lease and challenging unreasonable charges easier for many flat owners across England and Wales.
Primary source: GOV.UK: Leasehold property