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Leasehold vs Freehold: What the Difference Means for You

Leasehold vs freehold in the UK explained: ownership, ground rent, service charges, lease length, share of freehold and how reform affects you.

28 October 202612 min readBy PropertyZoom Editorial
Leasehold vs Freehold: What the Difference Means for You

With freehold, you own the property and the land it stands on. With leasehold, you own the right to live in the property for a fixed number of years, while someone else (the freeholder) owns the building or land beneath it. That single difference shapes what you pay each year, what you can change, how easily you can get a mortgage and what your home is worth when you come to sell.

This guide explains both tenures in plain terms, covers share of freehold, shows you how to check which one you are looking at, and sets out where the law is changing in England and Wales.

TL;DR

  • Freehold means owning the building and the land outright. Leasehold means owning a fixed-term lease, with a freeholder above you.
  • Flats are nearly always leasehold, but houses can be too, so check the tenure on every listing.
  • Leasehold can bring ground rent, service charges and permission rules. Lease length matters most: value can fall as the term shortens, and many lenders become reluctant below 80 years.
  • Share of freehold gives flat owners more control, but also shared responsibility for repairs, insurance and management.
  • Reform is under way in England and Wales, but not all of it is in force yet, so ask your conveyancer what applies on the day you buy.

Table of Contents

Freehold and leasehold: the core difference

GOV.UK describes freehold ownership as owning the house and the land it is built on. Freeholders are responsible for maintaining their property and land, and they do not pay ground rent or maintenance fees to anyone.

Leasehold works differently. Leasehold is a long-term tenancy giving you the right to occupy a property for a fixed number of years. When the lease runs out, rights over the property generally return to the landlord. You can sell the lease while it runs, but what you are selling is the time left on it.

In practice, you will meet the two tenures in these places:

  • Houses: usually freehold, though flats are nearly always leasehold, and houses can be too.
  • Flats: typically leasehold, with the freehold owned by a landlord, a management company or, in some buildings, the residents together.
  • Land and development plots: often sold freehold, though this varies, so confirm it before you commit. You can browse land and plots for sale and check the tenure shown on each listing.

Side by side

| | Freehold | Leasehold | |---|---|---| | What you own | Building and land | A lease for a fixed term | | Duration | Indefinite | Years remaining on the lease | | Ground rent | None | Possible, set by the lease | | Service charges | None to a freeholder | Often, for maintenance, insurance and shared areas | | Control | Fairly extensive | Shared with, and limited by, the landlord | | Typical property | Houses | Flats, some houses | | Main risk | You maintain everything | Shortening lease and ongoing charges |

The control point comes from a government-commissioned review of enfranchisement and lease extension, which sums up freehold as lasting forever with fairly extensive control, and leasehold as time-limited with control shared with the landlord.

What leasehold can cost you

Leasehold is not automatically a bad choice. Plenty of people live happily in leasehold flats, and in many city centres it is the only option. The point is to know the commitments before you make an offer.

Ground rent

Ground rent is a payment to the freeholder, set by the lease. Leaseholders may have to pay ground rent, service charges and administration charges. Some older leases have ground rent that rises sharply over time, which can make a flat harder to sell or mortgage.

For new leases the position is simpler. From 30 June 2022, the Leasehold Reform (Ground Rent) Act 2022 prohibited financial ground rent for most new regulated leases in England and Wales. It did not change the position for existing leaseholders, so a flat sold in 2026 on an older lease may still carry it.

Service charges

Service charges usually cover maintenance and repairs, building insurance and cleaning of shared areas. GOV.UK explains that they are payable only where the lease requires them and a formal demand is issued, and that the spending must be reasonably incurred on services of a reasonable standard. If a charge looks excessive, you have grounds to question it.

When you are comparing two flats, ask for the last few years of service charge accounts, not just the current figure. A low charge can hide a reserve fund that is too small, which means a large bill later.

Lease restrictions

Leases set rules. Depending on the wording, you may need permission to sublet, renovate or keep a pet. Read these clauses before you offer, especially if you plan to rent the property out or knock through a wall.

Lease length

This is the factor that surprises buyers most. A typical long lease is 99, 125 or 999 years. The value of a leasehold property decreases over time, and extending can cost considerably more once fewer than 80 years remain because of something called marriage value. GOV.UK's buying guidance also notes that many lenders may refuse to lend when fewer than 80 years remain.

Lease terms compared with the 80-year threshold

A practical rule: treat 80 years as a line you do not want to be near when you sell. If a flat you like has 85 years left, price in the cost of an extension and the time it takes.

Is a 999-year lease as good as freehold?

No, though in daily life it can feel close. A 999-year lease still counts down from the day it was created, and when any lease ends, the leaseholder's interest ends and the freeholder can occupy the property. The lease can also still carry restrictions and charges. What a very long lease does remove is the practical worry about the term running out, but ground rent, service charges and the landlord's consent rules can all still apply.

Share of freehold: the middle route for flats

Share of freehold means you own the leasehold of your flat plus a share of the building's freehold. It can give you greater control over the property and service-charge costs, but it may involve more administration, such as arranging building insurance.

The benefits, as the Law Society sets them out, include greater control over how the building is managed, no separate freeholder or landlord, and no ground rent. Owners can also extend leases to 999 years more easily, but the responsibilities include regulatory compliance, managing the building and resolving disputes.

The human side matters as much as the legal side. Repairs, insurance and management are shared, which can lead to disputes between co-owners. It suits a small building where neighbours get on and someone is willing to organise things. It suits a large block with absent owners much less.

Before you buy a share of freehold flat, ask:

  1. Who owns the freehold company, and are all flat owners shareholders?
  2. Is the lease itself long, or only the freehold share?
  3. Who arranges insurance, and how are major works funded?
  4. Is there a reserve fund, and what has been spent in recent years?
  5. Have there been disputes between owners?

How to check whether a property is leasehold or freehold

Start with the listing. Good listings state the tenure, and for leasehold they should show the remaining lease length, the ground rent and the service charge. On PropertyZoom you can filter properties to buy and compare the essentials side by side, which makes it easier to spot a flat with a short lease or heavy charges before you book a viewing.

Then verify it properly:

  1. Ask the agent for the tenure, lease length, ground rent and service charge in writing.
  2. Check the title. HM Land Registry records whether a property is registered, its title number and whether the tenure is freehold or leasehold. Its MapSearch service is aimed at professional users, so in practice your conveyancer will do this for you.
  3. Request the management pack. A management pack using the LPE1 form can provide information on service charges, ground rent, arrears and planned works.
  4. Check for arrears. Buyers should ask the seller's solicitor about outstanding service charges or ground rent arrears, because they could potentially become liable for those debts.

A specialist can read the lease for you. You can find property conveyancers in the UK through our directory, and it is worth choosing one who handles leasehold flats regularly.

Leasehold reform in England and Wales

The rules are moving, and the details depend on where you are. Leasehold law is devolved, and the reforms discussed here apply to England and Wales.

The Leasehold and Freehold Reform Act 2024 introduces a new right for leaseholders of houses and flats to a 990-year lease extension at a peppercorn ground rent, on payment of the statutory price. Government guidance says the Act will make lease extensions and freehold purchases cheaper and easier by removing marriage value and capping the ground rent used in the calculations at 0.1% of the property value. Under the reforms, leaseholders will pay their own conveyancer and valuer costs but not the freeholder's, though in limited cases they may pay a fixed contribution.

Not every part is switched on. The HomeOwners Alliance tracks the position and, in its latest update, says the draft Leasehold and Commonhold Reform Bill was published on 27 January 2026. Its proposals include capping existing ground rents at £250 a year and making commonhold the default for new flats, and it describes the ground rent cap as proposed, not yet law.

What this means for you today:

  • If you are buying: do not assume a future saving. Price the flat on the rules that apply when you complete, and ask your conveyancer what has come into force.
  • If you own a short lease: do not wait for reform if you are close to the 80-year line. Take advice on whether extending now or later makes sense for your situation.
  • If you are buying new: ask whether the flat is leasehold or commonhold, and what ground rent applies.

Freehold or leasehold for investors and landlords

If you are buying to let, the tenure affects your yield as much as the price does. Ground rent and service charges come out of your rental income, and lease restrictions can limit subletting. Always confirm that the lease permits letting, and whether the freeholder needs to give consent or be notified.

A short checklist for investors:

  • Calculate net yield after ground rent and service charges, not gross yield.
  • Check the lease for sublet and holiday-let restrictions.
  • Look at planned major works in the management pack.
  • Check the lease length against lender requirements, because it affects your exit as well as your mortgage.

Keeping each property's costs separate makes this far easier. Service charges, ground rent and repairs all vary by building, so rental property expense tracking that splits costs by property helps you see which flats actually earn their keep.

If you are comparing investment routes, you can look at HMO listings and commercial space to buy alongside residential. Many commercial and HMO purchases are freehold, but tenure varies by property, so check each one. Some investors go for freehold buildings split into flats, which can give control over the whole asset but also means taking on all of the maintenance.

Our perspective

We built PropertyZoom around a frustration we hear often: listings that bury the details that matter. Tenure is a good example. It sits at the heart of a purchase, yet in many listings it is hard to find, and the lease length, ground rent and service charge are scattered or missing.

Our view is simple. Before you fall for a kitchen or a view, you should know what you are actually buying. That means seeing tenure, lease length and running costs next to the price, and comparing homes on those terms. A leasehold flat with a long lease and modest charges can beat a freehold house that needs major work, and the reverse is just as true. Neither tenure is better in every case.

We would encourage three habits. Compare flats on total annual cost, not just the asking price. Treat lease length as part of the price. And bring in a conveyancer early, before you are emotionally committed.

— User

Finding the right property on PropertyZoom

PropertyZoom is free for property seekers. You can filter properties to buy or properties to rent, set the filters that matter to you, and compare options side by side. If you want to see everything in one place, start from all listings and narrow down from there.

FAQ

Can a freeholder kick out a leaseholder?

Not simply because they want to. A leaseholder has a right to occupy the property for the term of the lease, as long as they keep to its terms. If a lease ends, the freeholder can take back the property, and serious breaches of the lease can lead to legal action, so take advice from a solicitor if you receive a notice.

What does share of freehold mean when buying a flat?

It means you own your flat on a lease and also hold a share in the company or arrangement that owns the building's freehold. You gain more control and usually no ground rent, but you share responsibility for repairs, insurance and management with your neighbours.

How can I tell if a property is leasehold or freehold?

Check the listing, then ask the agent for the tenure in writing. Your conveyancer will confirm it from the Land Registry title, which records whether the property is freehold or leasehold. If it is leasehold, also ask for the lease length, ground rent and service charge.

Is leasehold always worse than freehold?

No. Leasehold can mean ground rent, service charges and restrictions, and value can fall as the lease shortens. But a long lease on a well-managed building with reasonable charges can be a sound purchase, and in many flats it is the only option.

Sources

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Leasehold vs Freehold: What the Difference Means for You | PropertyZoom