How you own a property — freehold or leasehold — affects cost, control and resale. Here’s the difference in plain English.
“Freehold” and “leasehold” describe how you own a property, and the difference has real consequences for cost, control and how easy a place is to sell. It’s one of the first things to establish about any home you’re considering.
If you own the freehold, you own the building and the land it stands on, outright and indefinitely. Most houses are sold freehold. There’s no ground rent, no service charge to a freeholder, and no lease ticking down — you’re responsible for maintaining everything, but you’re also in control of it.
If you own a leasehold, you own the right to live in the property for the length of the lease — but not the land or, usually, the building itself. Most flats are leasehold, because many flats share a building and grounds that someone has to own and maintain. You may pay ground rent and a service charge, and the lease has a fixed number of years remaining.
A lease is a wasting asset — as the years count down, the property can become harder to mortgage and sell. Lenders get wary as a lease drops toward and below around 80 years, and extending a lease can become markedly more expensive once it passes that point.
Be cautious of leasehold houses (as opposed to flats), historically a source of disputes over escalating ground rents; and always get the service-charge history and any major-works plans in writing. Your conveyancer will review the lease in detail, but raising these questions at the viewing stage helps you compare properties fairly.
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Check a property — freeFreehold gives you outright, indefinite ownership of the building and land with no ground rent or lease to worry about. Leasehold isn’t necessarily bad — most flats are leasehold — but it brings charges and a finite lease to factor in.
A lease is a wasting asset. As it counts down toward and below around 80 years, the property gets harder to mortgage and sell, and extending becomes more expensive. Always check the years remaining.
Typically ground rent (changed by recent reforms for many leases), a service charge for shared areas, and sometimes restrictions on pets, subletting or alterations. Ask for the service-charge history and any planned major works.