What the Difference between Freehold and Leasehold.

Freehold in a nutshell for you: 

Freehold is when someone who owns the freehold of a property own the property and the land that it stands on for an unlimited time period. According to the Civil Aviation Act 1982 you can also ‘own’ and have the rights to the ‘airspace’ above your property up to about 500 feet.   

As a freeholder, you will not need to pay ground rent, service charges or permission fees, but you will be responsible for the maintenance of the building.


Unlike a freeholder, as a leaseholder you own the property BUT NOT the land on which it is built – that is owned by the freeholder. Ownership of your property is also for a set period, which can be several years, decades or centuries, depending on the length of your lease. If your lease expires, ownership of your property technically passes to the freeholder.

Most flats are sold as leasehold properties with the freehold held by the builder or a firm, he or she has sold the freehold to. However, this is not always the case. Some flats – especially in houses converted into many flats – are sold on the basis that the owner shares the freehold with others in the same building, known as 'share of freehold'.

Houses tend to be sold as freehold properties as it is a more clear-cut scenario, given there is only one property on that piece of land. Controversially, however, this has not always been the case with new-builds homes in recent years.

On a lease, the most decent length should be 100+ years which can add thousands to your properties marketing value. However, if a lease is under 80 years it is considered dangerous territory and it an make the property difficult to sell or remortgage if you already own it, while for buyers, the lenders may be willing to give you a mortgage on it. That is why it I sometimes necessary to extend your lease.

Unfortunately, extending a lease can be both expensive and complicated, and the price only goes up the fewer years a lease has left on it. The Government is currently attempting an overhaul of the system to make it both easier and cheaper for homeowners to extend a lease. Information about the length of the lease should be provided by the housing developer or seller. If you are unsure, speak with your conveyancing solicitor.

Advantages of a leasehold:

  • A leasehold property is usually cheaper (because of the risks involved)
  • The freeholder is normally responsible for building maintenance in communal areas
  • The freeholder is responsible for the structure and maintenance of the building
  • The freeholder arranges building insurance

Disadvantages of a leasehold:

  • You pay service charges and ground rent to the freeholder, which can increase
  • You need written permission from the freeholder to change the property, and there may be large fees involved
  • You may not be allowed pets
  • You might not be able to run a business from home
  • You may not be able to sub-let
  • The fewer years are left on the lease, the harder it will be to sell the property (so you may not benefit from increasing property prices)
  • Conveyancing fees are typically higher when buying leasehold
  • You are effectively renting and at the mercy of the freeholder.

You know how we like to keep things short, however there is just to much to know about this one, and we want you to be informed as much as possible so you are in the loop all the time.

We hope you have an amazing rest of the week.


TGL iEstates family.

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