Freehold vs Leasehold: What's the Difference?

Every property listing in England and Wales states whether it is freehold or leasehold, yet many buyers do not fully understand what that distinction actually means for their money, their rights, and their long-term costs.

Quick Answer

Freehold means you own the property and the land it stands on outright, with no time limit and no landlord. Leasehold means you own the property for a fixed number of years under a lease agreement, while someone else, the freeholder, owns the land. Most houses in the UK are sold freehold, while most flats are sold leasehold, though share of freehold and commonhold offer alternative arrangements.

What Freehold Ownership Actually Means

With freehold ownership, you own the building and the land it sits on indefinitely. There is no lease term, no ground rent, and no landlord to answer to. You are responsible for maintaining the entire property, including the roof, walls, and land, but you also have much greater freedom to make changes, subject to normal planning permission rules.

What Leasehold Ownership Actually Means

With leasehold ownership, you own the property for a fixed term, commonly between 90 and 999 years, under a lease agreement with a freeholder. You do not own the land, and the freeholder is effectively your landlord for the purposes of the lease. This arrangement is most common with flats, since it allows a building’s shared structure and land to be managed collectively.

Costs That Come With Leasehold

Ground rent. An annual payment to the freeholder, though recent reforms have restricted ground rent on many new leases.
Service charges. Payments toward maintaining shared areas, building insurance, and communal facilities.
Permission fees. Some leases require paying the freeholder for permission to make alterations or sublet the property.
Lease extension costs. Extending a lease as it shortens can be expensive, particularly once it drops below 80 years remaining.

Why Lease Length Matters So Much

A shorter remaining lease reduces a property’s value and can make it harder to mortgage or sell. Many lenders become cautious once a lease has fewer than 80 years remaining, since extending a short lease becomes progressively more expensive under current valuation rules. Checking the remaining lease length is one of the most important steps when considering a leasehold purchase.

Share of Freehold Explained

Share of freehold is a middle-ground arrangement where leaseholders in a building jointly own the freehold, usually through a limited company. You still technically hold a lease on your individual flat, but collective ownership of the freehold generally gives more control over service charges and building management decisions than a standard leasehold arrangement.

What Is Commonhold?

Commonhold is a less common alternative where individual units are owned indefinitely, similar to freehold, while communal areas are managed collectively by a commonhold association rather than a separate freeholder. Introduced in 2002, commonhold has not been widely adopted so far, though government reforms have signalled an intention to make it the default tenure for new flats going forward.

Freehold vs Leasehold at a Glance

	Freehold	Leasehold
Land ownership	Yes, indefinitely	No, owned by freeholder
Time limit	None	Fixed lease term
Ground rent	None	Often payable, though restricted on many new leases
Service charges	None (self-managed)	Common, for shared building costs
Most common for	Houses	Flats

What Buyers Should Check Before Purchasing

The exact remaining lease length, since anything under 80 to 90 years affects value and mortgageability
Current ground rent terms and whether they escalate over time
Recent service charge history and any planned major works that could trigger large bills
Whether the property offers a route to buying the freehold or extending the lease
Any restrictions in the lease around alterations, subletting, or pets

Frequently Asked Questions

What is the main difference between freehold and leasehold?
Freehold means owning the property and land indefinitely. Leasehold means owning the property for a fixed term while someone else owns the land.

Are most flats leasehold in the UK?
Yes, leasehold remains the most common ownership structure for flats, though share of freehold and commonhold offer alternatives.

Why does a short lease reduce a property’s value?
Lenders become more cautious as leases shorten, and extending a short lease can be expensive, both of which affect resale value and mortgageability.

Can I buy the freehold of my leasehold property?
Often yes, either individually or jointly with other leaseholders in the building, depending on the specific circumstances.

Is commonhold available for most UK properties?
Not yet widely, though government reforms aim to make it the default tenure for new flats in the future.

Freehold vs Leasehold: What’s the Difference?