Freehold vs Leasehold: What First-Time Buyers Need to Know
For many first-time buyers, understanding the difference between freehold and leasehold can feel confusing — but it’s one of the most important things to get your head around before you buy. The type of ownership you choose affects your rights, responsibilities, and the long-term value of your home.
Here’s a simple guide to help you make sense of it all.
What Is Freehold?
If you buy a freehold property, you own the building and the land it stands on outright, with no time limit on your ownership.
Key Features of Freehold:
- You own the property and land forever
- No annual ground rent
- No service charges (unless it’s part of an estate with shared areas)
- You’re responsible for all maintenance
- You have more control over changes or improvements
Typical Freehold Properties:
- Most houses
- Some conversions with a share of freehold
- Freehold is generally seen as the simpler, more straightforward form of ownership.
What Is Leasehold?
With a leasehold property, you own the property for a set period of time, but not the land it sits on. The land is owned by the freeholder (sometimes called the landlord).
You essentially purchase the “right to live in the property” for the length of the lease.
Key Features of Leasehold:
- Ownership lasts for a fixed number of years (often 99, 125, or 999 years)
- You may need to pay ground rent, service charges, and maintenance fees
- Restrictions may apply (pets, subletting, renovations)
- You may need permission for major works
- The value can decrease as the lease gets shorter
Typical Leasehold Properties:
- Most flats and apartments
- Some new-build houses (though this is becoming less common)
The Importance of Lease Length
This is one of the biggest considerations for buyers.
- 80+ years: Generally good
- 70–80 years: Mortgage lenders may hesitate
- Below 70 years: Can be costly — extending the lease becomes more expensive the shorter it gets
A short lease can impact resale value, mortgage availability, and future buyers’ confidence.
Share of Freehold Explained
You own the leasehold for your individual flat, and you own a share of the freehold for the building itself.
This is most common in small blocks or converted houses split into flats. The freehold is usually owned jointly by the flat owners through:
- A company whose owners are shareholders of
- A group of individual owners listed on the title
You still have a lease, but you also have collective control over the building.
How It Differs from Standard Leasehold
With a typical leasehold, you’re a leaseholder only. The freeholder (often a landlord or management company):
- Sets the ground rent
- Controls service charges
- Organises maintenance
- Has the final say on permissions (pets, alterations, etc.)
With a Share of Freehold, these decisions are made by the flat owners themselves, whereas a leasehold will be managed. It is important with a share of freehold that the property is up to date with all the laws, especially since the Building Safety Act 2022
Understanding the difference between freehold and leasehold helps you make a confident and informed decision as a first-time buyer. While freehold gives you simplicity and control, leasehold isn’t something to fear — just something to understand.