Leasehold vs Freehold
What's the Difference?

With a freehold property, you own the property and the land it stands on outright. With a leasehold property, you own the right to occupy the property for a fixed term (the lease), but the land belongs to the freeholder (also called the landlord). When the lease expires, ownership reverts to the freeholder — though in practice, leases are usually extended before this happens.

Yes, provided you understand the terms of the lease and the implications. Most flats in England and Wales are leasehold — it is the standard tenure for flats. The key things to check are the length of the lease remaining, the level of service charges and ground rent, and the quality of the freeholder or management company. Your solicitor will review all of these and advise you before you commit.

A lease is generally considered "short" when it has fewer than 80 years remaining. Below 80 years, the cost of extending the lease increases significantly — because the freeholder becomes entitled to a share of the "marriage value" (the increase in the property's value that results from the extension). Mortgage lenders typically require a minimum of 70–85 years remaining. We strongly advise against buying a property with fewer than 80 years on the lease without first obtaining a lease extension quote.

Service charges are payments made by leaseholders to the freeholder or management company to cover the cost of maintaining and managing the building — cleaning, insurance, repairs, and major works. Service charges can vary significantly from year to year, particularly if major works are required. Your solicitor will obtain a management information pack and advise you on the level of service charges and any planned works before you exchange contracts.

Ground rent is a payment made by the leaseholder to the freeholder under the terms of the lease. Following the Leasehold Reform (Ground Rent) Act 2022, ground rent on new residential leases is capped at a peppercorn (effectively zero). However, many existing leases still have ground rent provisions — some of which include escalation clauses that can cause the ground rent to double every 10–25 years. We will review the ground rent provisions in any lease and advise you on the implications.

Yes. Under the Leasehold Reform, Housing and Urban Development Act 1993, qualifying leaseholders have a statutory right to extend their lease by 90 years (on top of the unexpired term) at a peppercorn ground rent. You must have owned the property for at least two years. The cost of a lease extension depends on the unexpired term, the ground rent, and the value of the property. We can advise on the process and costs.

Commonhold is an alternative to leasehold for flats. Under commonhold, each flat owner owns their flat outright (freehold) and is a member of the commonhold association, which owns and manages the common parts. Commonhold is rare in England and Wales — most flats are still leasehold — but the government has announced plans to make commonhold the default tenure for new flats.