The main difference between freehold and leasehold is what you own and for how long. With a freehold property, you normally own the building and the land indefinitely. With a leasehold property, you own the right to occupy it for the number of years stated in the lease, while the freeholder owns the land or building.
These ownership arrangements can affect maintenance responsibilities, ongoing charges and how the property may be used or altered. The details vary between properties, particularly with leasehold homes.
This article provides a general overview of leasehold and freehold ownership in England and Wales. It is factual information, not legal advice. A solicitor or conveyancer should review the title, lease and related documents and explain how their terms apply to an individual purchase.
The main difference is what you own and for how long. A freeholder normally owns the property and the land it stands on without a fixed end date. A leaseholder owns the right to use and occupy the property for the period stated in the lease, while the freeholder retains ownership of the land or building.
Flats in England and Wales are commonly sold on a leasehold basis because several homes occupy the same building, although houses can also be leasehold.
Buying a freehold property usually means acquiring ownership of both the building and the land included within its title. The ownership does not expire after a set number of years.
The freeholder is generally responsible for the upkeep of the property and its grounds. This may include arranging and paying for repairs to the roof, walls, drainage, boundaries and other parts of the building, depending on what is included in the title.
Freehold ownership can offer greater control, but it does not remove every restriction. Planning requirements, building regulations, restrictive covenants and the rights of neighbouring owners may still affect how the property can be used or altered.
Some freehold properties form part of an estate with shared roads, landscaped areas, drainage systems or other communal facilities. In these cases, the owner may have to contribute towards an estate management or maintenance charge. The property documents should set out whether any such arrangement applies.
A leasehold property is owned for a fixed period under a legal agreement called a lease. The lease states how long the ownership lasts and sets out the relationship between the leaseholder and the landlord or freeholder. When the lease expires, the leaseholder’s legal interest normally ends and the property reverts to the freeholder. Residential occupation rights can be more complex, so anyone dealing with an expiring lease should obtain specialist legal advice.
Leasehold ownership is especially common for flats because the structure, roof, entrance, corridors and other communal areas often serve more than one home. The lease helps define which parts belong to the individual leaseholder and how the shared building is managed.
Every lease is different, but it may cover:
These are legal terms attached to the individual property. A solicitor or conveyancer can review the lease and explain the obligations, rights and restrictions it contains.
Buying a leasehold property may involve ongoing costs in addition to the purchase price. Depending on the lease and how the building is managed, a leaseholder may also be responsible for the following.
Service charges can be used to cover the maintenance, repair, insurance and management of shared parts of the building or estate. The amount may vary from year to year, particularly if major works are required.
Some existing leases require ground rent to be paid to the freeholder. For most new regulated residential long leases granted in England and Wales from 30 June 2022, ground rent is limited to a peppercorn, which has no financial value. The terms and date of the individual lease should still be checked.
Some leasehold developments collect money into a reserve or sinking fund to contribute towards future major repairs, such as replacing a roof. The lease and management information should explain whether a fund exists and how contributions are handled.
Leaseholders may be asked to contribute towards substantial work to the building, such as roof replacement, external repairs, redecorating or work to shared services. Before buying, it is important to understand whether major work is planned, what previous repairs have cost and whether the leaseholder may be expected to contribute.
A lease may allow charges for certain administrative tasks or permissions, such as providing sales information, registering a change of ownership or considering an application to alter or sublet the property.
A lease becomes shorter over time. The number of years remaining can affect the property’s value, mortgageability and future sale, as well as the potential cost and process involved in extending the lease.
Lease length becomes increasingly important as the remaining term reduces. Leases with 80 years or fewer remaining are commonly treated as short leases and can be more expensive to extend, as well as more difficult to mortgage or sell. Buyers should confirm the remaining term and ask their solicitor, conveyancer and mortgage provider how it affects the proposed purchase.
A flat described as having a “share of freehold” will usually still be owned under a lease. In addition, the flat owner holds a share in the company or arrangement that owns the freehold, often alongside other leaseholders in the building.
This can give the owners greater involvement in how the building is managed, but the lease does not disappear. Service charges, shared repair costs and restrictions may still apply, and effective management usually depends on the owners cooperating and keeping the freehold arrangements properly administered.
The legal documents and management information should provide a fuller picture of the ownership arrangement. Useful points to establish include:
This list is intended as general information rather than a substitute for reviewing the documents for the individual property.
Neither ownership type tells you whether a particular property is a good purchase. A well-managed leasehold flat with clear responsibilities and properly maintained communal areas may suit a buyer well. A freehold house may offer more control, but the owner will also carry direct responsibility for the cost of maintaining the whole property.
The tenure, legal documents, ongoing costs, location, suitability and physical condition of the home should all be considered together.
A lease explains the ownership arrangement and may set out who is responsible for different parts of the building. It does not confirm whether those parts are in good condition. A leasehold buyer may be expected to contribute towards future repairs to a shared roof, while the owner of a freehold house may be solely responsible for repairing an existing defect. A property survey helps identify these physical issues before purchase.
A lease may require the freeholder’s permission before structural or non-structural alterations are made. The wording and requirements vary between properties, so proposed work should not be assumed to be permitted.
Read our guide to structural alterations to a leasehold flat for practical points to consider. Any legal permissions should be confirmed through the appropriate professional advisers and the parties responsible for the building.
A survey does not interpret the lease or replace the work of a solicitor or conveyancer. Its purpose is to provide an independent assessment of the property’s visible condition and highlight defects or areas that may require further investigation.
Depending on the property and survey level, this may include observations about:
This information can be particularly useful with a leasehold property because defects affecting shared parts of a building may lead to future maintenance work or shared costs. The survey findings can help the buyer raise more informed questions with the seller, managing agent and conveyancer.
A RICS Home Survey Level 2 is commonly suitable for conventionally built properties in reasonable condition. A RICS Home Survey Level 3 provides a more detailed inspection and report and may be better suited to properties that are older, extensively altered, visibly deteriorated or built using unusual materials. The appropriate level should be confirmed based on the individual property.
Not sure which report fits the property? Choose the right survey for the property or speak to the Cosey Homes team for general guidance on the available survey levels.
A leaseholder owns the right to occupy and use the property for the remaining term of the lease. The freeholder retains the underlying ownership of the land or building. The precise rights and responsibilities are set out in the individual lease.
Yes. Although flats are more commonly leasehold, some houses are also sold on a leasehold basis. The title and lease documents should confirm the tenure, remaining term, charges and responsibilities.
Yes. A freehold property on a managed estate may be subject to an estate charge for shared roads, landscaping, drainage or other communal facilities. The title documents should explain the arrangement.
Not usually. A flat with a “share of freehold” will generally remain leasehold, while the owner also holds a share in the freehold-owning company or arrangement. The lease and shared management responsibilities still apply.
A solicitor or conveyancer should review the lease, title and management information and explain the legal rights, restrictions, charges and responsibilities attached to the property. A surveyor assesses the physical condition rather than interpreting the lease.
Leasehold and freehold describe how a property is owned, but they do not tell you everything about the home. Before exchange, buyers should understand the legal arrangement through their solicitor or conveyancer and the physical condition through an appropriate property survey.
Cosey Homes provides independent RICS home surveys across the UK. Get an instant survey quote or speak to our team if you need help identifying the most suitable survey for the property you are buying.
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