Freehold vs Leasehold: What UK Buyers Need to Know

What Freehold and Leasehold Actually Mean

Freehold means you own the building and the land it sits on outright, with no time limit. You are responsible for all maintenance and insurance, but you answer to no one regarding how you use the property (within planning law). Most houses in England and Wales are freehold.

Leasehold means you own the right to occupy the property for a fixed period — typically 99 to 999 years when first granted — but the land beneath it belongs to a freeholder (the landlord). Most flats are leasehold because the building's structure and common areas need to be managed collectively. When the lease expires, ownership reverts to the freeholder unless extended.

The critical point is that a lease is a wasting asset. A 90-year lease is worth significantly less than a 999-year lease on an otherwise identical flat, because mortgage lenders become cautious below 80 years and the cost of extending rises sharply as the lease shortens.

Costs: Ground Rent, Service Charges, and Permissions

Freeholders have no ongoing tenure costs beyond standard ownership expenses — mortgage, insurance, council tax, and maintenance they choose to do. Leaseholders typically pay ground rent to the freeholder and a service charge to cover building insurance, communal maintenance, and management fees.

Ground rent on older leases can be nominal (a peppercorn, or £50–£100 per year), but some leases granted between 2000 and 2022 included escalating ground rent clauses — doubling every 10 or 25 years — that rendered properties unmortgageable. The Leasehold Reform (Ground Rent) Act 2022 capped ground rent at zero (a peppercorn) for new leases granted from 30 June 2022, but existing leases with problematic clauses remain in force unless voluntarily varied by the freeholder.

Service charges vary enormously. A well-managed purpose-built block might charge £1,500–£3,000 per year. A period conversion with a lift, porter, and communal gardens in central London can exceed £8,000. Leaseholders also typically need the freeholder's consent (and sometimes a fee) for alterations, subletting, or keeping pets.

Lease Extensions and Share of Freehold

If you own a leasehold flat and have held the lease for at least two years, you have a statutory right to extend by 90 years at a peppercorn ground rent (on top of the remaining term). The cost depends on the property value, remaining lease length, and ground rent — the shorter the lease, the more expensive the extension. Below 80 years, marriage value kicks in, roughly doubling the premium.

Alternatively, if at least half the flats in a building qualify, leaseholders can collectively purchase the freehold — known as collective enfranchisement. This gives the group control over management, insurance, and future lease extensions at cost. Share of freehold is widely regarded as the best of both worlds for flat owners: you retain leasehold tenure but collectively control the freeholder entity.

The Leasehold and Freehold Reform Act 2024 promises to simplify and reduce the cost of lease extensions and enfranchisement, but key provisions require secondary legislation that has not yet been enacted as of March 2026. Until commencement orders are made, the existing statutory framework applies.

Which Should You Buy?

For houses, freehold is almost always preferable. Leasehold houses still exist — particularly on new-build estates where developers retained the freehold — but they come with ground rent obligations and less control. If you are considering a leasehold house, scrutinise the ground rent clause and check whether the freehold is available to purchase.

For flats, leasehold is the norm and not inherently problematic provided the lease is long (ideally 90+ years, or 125+ for maximum mortgage flexibility), the ground rent is reasonable or peppercorn, and the building is well managed. Share of freehold is the gold standard. A short lease, an unresponsive freeholder, or opaque service charges are the red flags that turn a leasehold flat into a liability.

Frequently Asked Questions

What is the minimum lease length that mortgage lenders will accept? Most high-street lenders require at least 70–85 years remaining at the point of mortgage offer, though many prefer 85+ — check with your specific lender, as criteria vary and some specialist lenders will go lower.

Can you convert a leasehold house to freehold? Yes — leaseholders of houses have a statutory right to buy the freehold under the Leasehold Reform Act 1967 after two years of ownership, and many do so as soon as they qualify to eliminate ground rent and gain full control.

What is share of freehold and why is it desirable? Share of freehold means the leaseholders in a building have collectively purchased the freehold, giving them control over management, insurance, and future lease extensions — it removes the adversarial freeholder relationship and is widely regarded as the best flat ownership structure.

How much does a lease extension cost on a typical flat? For a £300,000 flat with a 75-year lease, a statutory extension typically costs £10,000–£20,000 including valuation and legal fees — but costs rise sharply below 80 years due to the marriage value premium, so acting early is strongly advisable.

Are new-build leasehold properties safe to buy? New leases granted after 30 June 2022 must have zero ground rent, which removes one historic risk — but you should still verify the service charge structure, management arrangements, and lease length, as these vary considerably between developments.