What is freehold vs leasehold?

What is freehold?

Freehold means you own:

• The property itself - The building and everything in it
• The land it sits on - You own the ground beneath and around it
• Forever - There's no time limit on your ownership

When you own a freehold property, you have complete control (within planning laws) and don't pay ground rent or service charges to a landlord.

What is leasehold?

Leasehold means you own:

• The right to live in the property - But not the property itself
• For a fixed period - Usually 99, 125, or 999 years
• Subject to conditions - You must pay ground rent and service charges

When you own a leasehold property, you're essentially renting from the freeholder (the person who owns the land) for a very long time. The lease sets out your rights and responsibilities.

What are the differences?

Freehold:

• You own the property and land forever
• No ground rent or service charges (unless in a shared development)
• Full control over the property
• Responsible for all maintenance and repairs
• Can be harder to sell if there are issues

Leasehold:

• You own the right to live there for a set period
• Must pay ground rent and service charges
• May need permission for alterations
• Freeholder responsible for building maintenance (but you pay for it)
• Lease gets shorter over time, which can affect value

How long do leases last?

Leases typically start at:

• 99 years - Common for older properties
• 125 years - Common for newer properties
• 999 years - Very long leases, almost like freehold

As the lease gets shorter, the property can become harder to sell and less valuable. Leases under 80 years can be particularly problematic, as extending them becomes expensive.

Can I extend my lease?

Yes, if you own a leasehold property, you have the right to extend your lease:

• By 90 years - You can add 90 years to your existing lease
• At a "peppercorn" ground rent - Ground rent reduces to virtually nothing
• You'll need to pay - The freeholder is entitled to compensation

The cost depends on how long your lease has left. The shorter the lease, the more expensive it is to extend.

Can I buy the freehold?

If you own a leasehold house, you may be able to buy the freehold (this is called "enfranchisement"):

• You have the right to buy the freehold if you meet certain conditions
• You'll need to pay the freeholder for it
• It can be expensive - But gives you full ownership

For flats, you can join with other leaseholders to buy the freehold collectively (called "collective enfranchisement").

What should I consider when buying?

When buying a property, check:

• Is it freehold or leasehold? - This will be in the property details
• If leasehold, how long is the lease? - Shorter leases can be problematic
• What are the ground rent and service charges? - These are ongoing costs
• Are there any restrictions? - Check what you can and can't do
• Can the lease be extended? - This may be important for future value

Your solicitor will check all of this during the conveyancing process.

Which is better?

Neither is inherently better - it depends on your situation:

Freehold is better if:

• You want full control
• You don't want ongoing charges
• You're buying a house

Leasehold can be fine if:

• You're buying a flat (most are leasehold)
• The lease is long (100+ years)
• The charges are reasonable
• You understand the restrictions

The key is understanding what you're buying and what it means for you.

Summary

• Freehold means you own the property and land forever
• Leasehold means you own the right to live there for a set period
• Most houses are freehold, most flats are leasehold
• Leasehold properties require ground rent and service charges
• Leases can be extended, but it costs money
• Shorter leases (under 80 years) can affect property value
• Check whether a property is freehold or leasehold before buying
• Understand the ongoing costs and restrictions before committing