Leasehold vs freehold: what UK buyers need to know

Freehold means you own the property and the land it sits on outright. There are no ongoing charges to a third party and no time limit on your ownership. Most houses in England and Wales are sold freehold.

Leasehold means you own the right to occupy the property for a fixed period — the lease term — which could be anything from 40 years to 999 years. The land and structure is owned by a freeholder (also called a landlord), to whom you may owe ground rent and service charges. When the lease expires, ownership reverts to the freeholder.

In Scotland, leasehold is effectively abolished for residential property — almost everything is sold freehold (or 'ownership' in Scots law). The leasehold issues described here apply primarily to England and Wales.

A new-build leasehold flat might come with a 999-year lease — essentially the same as freehold for any practical purpose. Problems arise when the lease gets shorter.

Below 80 years, mortgage lenders start to get nervous. Many won't lend at all on leases below 70 years, and those that do often charge a premium. When a lease drops below 80 years, extending it also becomes significantly more expensive because the freeholder can claim a share of the property's 'marriage value'.

When you're buying, always ask how many years are left on the lease. A property with 85 years remaining sounds fine — but 85 years will become 70 years in 15 years' time. You'll likely want to extend the lease before then, and to do so under the Leasehold Reform Act you need to have owned the property for two years first.

Service charges are fees you pay to the freeholder (or managing agent) for maintaining the building, communal areas, and sometimes insurance. They can be reasonable (£1,000–£2,000 a year for a well-managed block) or very high (£5,000+ in newer build-to-rent and luxury blocks). Always ask for three years of service charge accounts before committing.

Ground rent is a periodic payment to the freeholder for the land. The Leasehold Reform (Ground Rent) Act 2022 abolished ground rent for new leases. But many existing leases, especially those from the 2000s and 2010s, have 'doubling' or RPI-linked ground rent clauses that make the property very difficult to mortgage or sell. Check the ground rent terms carefully.

A good conveyancing solicitor will review the full lease, highlight any problematic clauses (doubling ground rent, short lease, restrictive covenants), report on the service charge history, and advise you on your rights. This is exactly why conveyancing costs more for leasehold properties.

They'll also check whether you're buying a share of freehold — a structure where the flat owners collectively own the freehold company. This is generally preferable to a third-party landlord situation and often makes the property easier to sell.

The Leasehold and Freehold Reform Act 2024 passed into law in May 2024. Key changes include: the abolition of the two-year qualifying period before you can extend your lease, a cap on ground rent for new leases at a 'peppercorn' (effectively £0), and changes to make it easier and cheaper to extend leases or buy the freehold collectively.

Some provisions are not yet in force and require secondary legislation, so the full benefit is still arriving. The direction of travel is clearly towards making leasehold fairer for buyers — but in the meantime, the checks above remain essential.