Freehold vs leasehold: key differences at a glance
The two tenure types differ significantly in what you own, what you pay and what control you have.
| Feature | Freehold | Leasehold |
|---|---|---|
| What you own | The property and the land, permanently | The right to occupy for a fixed term |
| Time limit on ownership | None | The remaining lease length (e.g. 99 to 999 years) |
| Ground rent | None | Payable to freeholder (many new leases: zero) |
| Service charges | None (you maintain it yourself) | Payable for shared areas, building insurance etc |
| Buildings insurance | You arrange it | Often arranged and billed by the freeholder |
| Alterations | Generally your choice | Usually require freeholder's consent |
| Subletting / renting out | Generally your choice | May require consent and/or a fee |
| Control over communal areas | Full (if no estate) | Limited, subject to lease terms |
| Typical property type | Houses | Flats (and some houses) |
| Typical UK tenure split | ~85% of properties | ~15% of properties (rising in new-builds) |
Always read the specific lease. Terms, charges and restrictions vary enormously between buildings and developers.
Why lease length is critical
With leasehold, the number of years remaining on the lease is arguably the most important number to check before you buy. As a lease gets shorter it becomes worth progressively less, and once it drops below 80 years, extending it becomes significantly more expensive because of a legal concept called 'marriage value'. This is the uplift in the property's value that a longer lease creates, and leaseholders are required to share half that uplift with the freeholder once the lease falls below 80 years.
In practical terms, a flat with 78 years on the lease will cost substantially more to extend than one with 83 years. The difference in extension cost can easily run to tens of thousands of pounds. Solicitors generally advise triggering an extension before the lease drops below 82 years to provide a safety margin.
Mortgage lenders are also cautious about short leases. Most require the lease to extend well beyond the end of the mortgage term - a common rule of thumb is that the lease must have at least 85 years remaining to be mortgageable with most high street lenders, though individual policies vary. A lease with fewer than 70 years remaining may be unmortgageable with many lenders, drastically reducing your buyer pool when you come to sell.
Typical leasehold costs to budget for
These ongoing and one-off costs are in addition to your mortgage payments.
| Cost | Typical range | Notes |
|---|---|---|
| Ground rent | £0 to £500 per year | New leases: peppercorn (zero). Older leases vary widely |
| Service charge | £1,000 to £5,000+ per year | Higher for luxury blocks with concierge, lifts or communal facilities |
| Buildings insurance (via freeholder) | £200 to £800 per year | Often included in service charge |
| Major works contribution (sinking fund) | £500 to £5,000+ when levied | For roof, cladding, lifts, communal refurbishment |
| Lease extension (at 80+ years) | £5,000 to £20,000 (premium + fees) | Premium paid to freeholder plus legal and valuation costs |
| Lease extension (at under 80 years) | £20,000 to £60,000+ | Marriage value makes this significantly more expensive |
| Permission fee (subletting / alteration) | £50 to £500 per request | Charged by freeholder or managing agent |
| Freehold purchase (enfranchisement) | Variable, often £10,000 to £50,000+ | Shared cost across all leaseholders in the building |
Always request at least two years' worth of service charge accounts and minutes from residents' meetings before exchange of contracts.
Share of freehold: what it means and why it matters
Some flats are sold with a 'share of freehold', meaning the flat owners collectively own the freehold of the building through a jointly held company or residents' association. Each flat owner holds a share in that company in addition to their leasehold interest. This is generally regarded as the most desirable form of flat ownership.
A share of freehold gives residents collective control over building management, service charges, insurance and maintenance standards. It also makes it far simpler and cheaper to extend leases, because the residents effectively grant extensions to themselves, paying only legal and valuation costs rather than a premium to an external freeholder.
Not all share of freehold arrangements are well-managed. Before buying, check how the freehold company operates, whether all flat owners participate, how decisions are made, and whether there are any disputes or debts. A professionally managed share of freehold building with engaged, cooperative residents is significantly better than a poorly run one.
Legal rights to extend the lease or buy the freehold
Leaseholders in England and Wales have statutory rights that protect them. If you have owned your flat for at least two years and the original lease was granted for more than 21 years, you have the right under the Leasehold Reform Housing and Urban Development Act 1993 to extend your lease by 90 years on top of the remaining term, at a zero ground rent (peppercorn). The freeholder cannot refuse unless you do not qualify.
Similarly, if a majority of leaseholders in a building (usually at least half) want to buy the freehold collectively, they have a legal right of 'collective enfranchisement'. This process gives residents ownership of the building and control over its management. It is complex and requires specialist legal and valuation advice.
Government reforms under the Leasehold and Freehold Reform Act 2024 have made changes to make lease extensions and freehold purchases easier and cheaper, including abolishing marriage value. Some reforms are being phased in, so confirm current rules with a leasehold specialist before proceeding.
Essential checks before buying leasehold
Ask for the lease document, confirm the remaining years, and request the current ground rent, service charge accounts for the past two to three years, any major works planned or in progress, the building's sinking fund balance, and the freeholder or managing agent's details. Check the lease for restrictions on alterations, subletting, pets and use. A short lease, escalating ground rent, large upcoming works bill or a poorly run management company can all affect value, mortgageability and your enjoyment of the property.