Freehold vs leasehold. What’s the difference?

When buying a property, one of the most important things to think about is if it is freehold or leasehold. Knowing the differences between the two can help you make a smart decision that fits your needs.

Freehold

When you buy a freehold property, you own it completely. You can live there as long as you want, and you won’t have to pay extra monthly fees on top of your mortgage. You are in charge of taking care of the property.

Leasehold

When you buy a leasehold property, you are buying the right to live in that property for a set time. Someone else owns the freehold of the property, and they usually charge you an annual ground rent to stay there.

As a leaseholder, you will usually have other costs to pay. These costs often include service charges, which goes toward things such as buildings insurance, concierge services and any extra amenities like a gym, as well as maintenance fees.

These fees help the freeholder keep the property in good condition by paying for maintenance and repairs.

Leaseholds usually last between 99 and 999 years, but how much time is left on the lease can affect the property's value. If a lease has less than 80 years remaining, it may be hard to sell or mortgage the property.

Can you buy the freehold on your leasehold property?

You can ask the landlord to sell you the freehold at any time, so long as you meet certain criteria.

• Your home needs to be a building that is mainly used as a house and should stand separately from other houses next to it. Even if the building has been turned into flats, it’s okay as long as you own the lease for the whole property. In some cases, buildings with businesses on the ground floor may also count as a house, like a shop that has a flat above it.
• You need to have a long-term lease. This means it should have originally lasted for more than 21 years, or you should have the option to renew it after that time.
• To apply for buying the freehold, you have to be the leaseholder of the house when you make your request. If you have the right to buy the freehold but pass away, your family can still make the request to buy it within two years after you’re gone.

There are different legal steps and rules depending on whether your home is a:

• Flat - you’ll need to buy a share of the freehold
• House - you may have the right to buy the freehold

Right of first refusal

Landlords who want to sell the freehold of a building containing flats usually have to offer the leaseholders the first chance to buy it. This is known as your right of first refusal.

Benefits of freehold

• Full ownership – You own the property and land outright with no time restrictions.
• No ground rent – Unlike leasehold properties, you do not need to pay annual ground rent.
• Easier to sell – Freehold properties tend to be more attractive to buyers and retain their value better.
• No landlord dependence – No need to seek permission from a freeholder for alterations or maintenance.

Disadvantages of freehold

• Higher initial cost – Freehold properties tend to be more expensive to purchase.
• Maintenance responsibility – All upkeep, repairs, and associated costs fall on the owner.

Benefits of leasehold

• Less maintenance responsibility – The freeholder usually maintains common areas and building structures.
• Good for apartments – Many flats and apartments are leasehold, which simplifies shared responsibilities.

Disadvantages of leasehold

• Limited ownership – Once the lease expires, ownership returns to the freeholder unless extended.
• Ground rent & service charges – Leaseholders must pay ongoing fees, which can increase over time.
• Restrictions on changes – You may need permission to make modifications or sublet the property.
• Lease extensions can be costly – Extending a lease, particularly if it’s under 80 years, can be expensive.

Who should buy freehold or leasehold properties?

Freehold

Homebuyers who want long-term stability and complete ownership of their property will find this option ideal. It suits families and individuals who want to avoid extra costs and restrictions.

Leasehold

People buying flats or apartments, first-time buyers looking for affordable options, and those who want to share maintenance costs.

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