When buying a property in the UK, you will often come across the terms leasehold and freehold. Understanding the difference matters, as leasehold ownership comes with its own rules, costs, and responsibilities that can significantly affect your experience as a homeowner.
Leasehold versus freehold
When you buy a freehold property, you own the building and the land it sits on outright. With a leasehold property, you purchase the right to occupy the property for a fixed period of time as set out in the lease, but the land and building are ultimately owned by the freeholder. Leasehold is most common with flats, though some houses are also sold on a leasehold basis.
Lease lengths
Leases typically start at 99 years, though some run to 125 or even 999 years. The number of years remaining on a lease is important. Once a lease falls below 80 years, it becomes significantly harder to sell or remortgage the property, and extending the lease becomes considerably more expensive. If you are buying a leasehold property, checking the remaining lease length is essential.
Ground rent and service charges
As a leaseholder, you will typically pay ground rent to the freeholder. This is an annual charge set out in the lease, and its amount and review terms vary. Recent legislation has restricted ground rent on new leases to zero or a peppercorn amount, but older leases can contain ground rent clauses that increase significantly over time, so it is worth checking carefully.
Service charges cover the cost of maintaining shared areas, the building’s structure, building insurance, and other communal services. These vary depending on the management of the building and what work needs to be done in any given year. You should ask to see several years of service charge accounts before buying to understand what to expect.
Extending the lease
If a lease is running short, leaseholders have a legal right to extend it once they have owned the property for at least two years. You can typically add 90 years to what remains on a flat’s lease. The cost of doing this depends on how many years are left and the value of the property, and it can be substantial, particularly once the lease falls below 80 years due to something called marriage value being added to the calculation.
Buying the freehold
In some cases, leaseholders have the right to buy the freehold of their property. For a house, this can be done individually. For a flat, it typically requires a group of leaseholders in the building to act together, a process known as collective enfranchisement. Owning the freehold gives you more control over the property, eliminates ground rent, and simplifies the process of lease extensions in future.
Leasehold reform
The rules around leasehold ownership have been subject to ongoing reform in the UK. Recent years have brought changes aimed at making leasehold fairer, including restrictions on ground rent for new leases and proposals to make it easier and less costly for leaseholders to extend leases or buy their freehold. It is worth keeping an eye on these changes, particularly if you already own a leasehold property.
Things to check before buying
Before purchasing a leasehold property, make sure you know the remaining lease length, the current ground rent and any review provisions, recent and projected service charges, whether there are any major works planned, and what the process is for extending the lease or purchasing the freehold. A solicitor specialising in leasehold conveyancing can help you understand the terms and flag any potential issues before you commit.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Approved by In Partnership FRN 192638 June 2026
