Leasehold vs Freehold: What Every UK Buyer Needs to Know
When you're buying a property in the UK, one of the first things your solicitor will confirm is whether it's leasehold or freehold. For many buyers, particularly first timers, this distinction can feel a bit obscure and like legal small print. In practice it has a significant impact on what you own, what you pay, and what you can do with your property. Here's what you need to understand before you proceed.
What is freehold?
If you buy a freehold property, you own the building and the land it sits on outright, and there's no time limit on your ownership and no landlord to answer to. Most houses in the UK are sold freehold.
Freehold ownership means you're responsible for the maintenance of the property and the land, but you're also in full control. You don't pay ground rent, there's no service charge, and you don't need anyone's permission to make alterations, subject to the usual planning and building regulations requirements.
What is leasehold?
If you buy a leasehold property, you own the right to occupy the property for a fixed term, typically between 99 and 999 years, but you don't own the land it sits on. The land is owned by a freeholder, sometimes called the landlord, and you pay ground rent for the privilege of occupying it.
Most flats in the UK are sold leasehold, and some houses are too, though leasehold houses have become increasingly controversial, and the UK government has been moving to restrict new leasehold house sales.
Why does lease length matter?
The number of years remaining on a lease is important for two reasons. First, mortgage lenders typically require a minimum number of years remaining on the lease, often at least 70 to 85 years at the end of the mortgage term, so a short lease can make a property difficult or impossible to mortgage. Second, the shorter the lease, the more expensive it becomes to extend, and the process of extending a lease can be complex and costly.
If you're buying a leasehold property with fewer than 80 years remaining on the lease, you should take specialist advice before proceeding. Once a lease drops below 80 years, the cost of extending it increases significantly. For more on what your solicitor should be checking on your behalf, read our guide to the conveyancing process.
Ground rent and service charges
As a leaseholder you'll typically pay two ongoing costs to the freeholder or their managing agent. Ground rent is a fee paid to the freeholder, which can be a nominal peppercorn amount or a more significant sum depending on the terms of your lease. Service charges cover your share of the building's maintenance, insurance and management costs.
Service charges can vary significantly and are worth scrutinising carefully before you buy. Ask your solicitor to review the last three years of service charge accounts, and check whether any major works are planned that could result in a large bill shortly after you move in.
Share of freehold
Some leasehold properties come with a share of freehold, which means the flat owners collectively own the freehold of the building. This gives you more control over how the building is managed and removes the risk of dealing with an unresponsive or costly freeholder. Share of freehold is generally considered a more attractive leasehold arrangement than a standard leasehold with a separate freeholder.
Questions to ask before buying a leasehold property
There are specific questions your solicitor should be raising on your behalf before you proceed with a leasehold purchase. How many years are left on the lease? What are the current ground rent and service charge amounts and how have they increased historically? Is there a managing agent and have their accounts been reviewed? Are there any major works planned for the building?
If you're still at the viewing stage, our guide to 10 questions to ask when viewing a house covers what to ask about leasehold and freehold status before you even make an offer. And once you're ready to proceed, our guide to making an offer on a house covers the next steps.
The full list of questions to ask when buying a leasehold property is included in the Home Truths Guide, alongside checklists covering every other stage of buying a home in the UK.