What Is Freehold?
Freehold means you own the building and the land it sits on outright, with no time limit. There is no landlord above you, no lease to expire, no ground rent to pay, and no service charges mandated by a superior interest. You are responsible for all maintenance and repairs, but you also have complete control over the property (subject to planning law and any restrictive covenants on the land).
Most houses in England and Wales are freehold. Freehold is generally considered the superior form of ownership because it is simpler, cheaper to maintain over time, and does not depreciate in the way that a lease does as years expire. Mortgage lenders prefer freehold properties and there are no lease-related complications when selling.
What Is Leasehold?
Leasehold means you own the right to occupy and use a property for a fixed period — commonly 99, 125, or 999 years when granted. The land and building are owned by the freeholder (landlord), to whom you typically pay ground rent and service charges. The lease is a legal contract that specifies your rights, obligations, and restrictions.
When a lease is long (say, 900+ years), the practical difference from freehold is minimal — you are unlikely to ever see the lease expire. But as a lease shortens, problems multiply. Below 80 years, extension costs increase sharply. Below 70 years, most lenders will not offer a mortgage. A lease is a wasting asset: it loses value over time unless extended.
Leasehold is the standard tenure for flats because multiple owners share a single building and common areas need collective management. However, leasehold houses exist too — around 1.4 million in England — and are widely regarded as an unfair tenure for houses since there is no structural reason for a house to be leasehold.
Share of Freehold and Commonhold
Share of freehold means the leaseholders of a building collectively own the freehold, usually through a management company in which each leaseholder holds a share. You still technically have a lease, but you (collectively) are your own landlord. This gives you control over service charges, building management, and lease extensions (which become much cheaper because you are negotiating with yourself). Share of freehold is widely considered the best tenure for flats.
Commonhold was introduced in 2002 as an alternative to leasehold for flats, allowing unit owners to own their flat freehold while sharing ownership of common parts through a commonhold association. In practice, commonhold has been almost unused — fewer than 20 commonhold developments exist in England and Wales. This is largely because developers and mortgage lenders were unfamiliar with it. The Leasehold and Freehold Reform Act 2024 includes provisions to make commonhold more practical, but widespread adoption is likely years away.
Costs Compared: Freehold vs Leasehold
Freehold ownership has no ongoing tenure-related costs. You pay for maintenance, insurance, and repairs as needed, but there are no ground rent payments, service charge demands, or lease extension fees. Your legal costs when buying are typically slightly lower because there is no lease to review.
Leasehold ownership involves ground rent (£0 to £500+ per year, though banned for new leases since June 2022), service charges (£800 to £6,000+ per year depending on the building), and potential lease extension costs (£5,000 to £50,000+ depending on the remaining lease length and property value). Buildings insurance is usually arranged by the freeholder and recharged via the service charge, which means you have no control over the policy or premium.
| Cost | Freehold | Leasehold |
|---|---|---|
| Ground rent | None | £0–£500+/year |
| Service charges | None (self-managed) | £800–£6,000+/year |
| Lease extension | Not applicable | £5,000–£50,000+ |
| Buildings insurance | Your choice | Freeholder's choice (recharged) |
| Major works | Your decision and cost | Section 20 consultation (shared cost) |
| Legal costs (purchase) | £800–£1,500 | £1,000–£2,500 (lease review adds cost) |
Leasehold and Freehold Reform Act 2024
The Leasehold and Freehold Reform Act 2024 received Royal Assent in May 2024 and introduces significant changes to leasehold law, though most provisions require secondary legislation and are being implemented in phases. Key changes include extending the standard lease extension from 90 years (flats) and 50 years (houses) to 990 years, removing marriage value from lease extension calculations, and banning new leasehold houses except in limited circumstances.
The Act also caps ground rent at a peppercorn (zero financial value) on lease extension, strengthens leaseholders' rights to manage their building, improves transparency on service charges and insurance commissions, and makes it easier to take over the freehold collectively. These changes are broadly positive for existing leaseholders, but the timeline for implementation is uncertain — some provisions may not take effect until 2025 or 2026.
If you are buying a leasehold property now, the Act does not yet change your immediate costs. Lease extensions still follow the current valuation framework until the relevant sections are brought into force. However, the direction of travel is clear: Parliament is moving toward making leasehold fairer, cheaper, and eventually replacing it with commonhold for new builds.
Which Should You Choose?
For houses, always prefer freehold. There is no practical or structural reason for a house to be leasehold, and the ongoing costs and restrictions are an unnecessary burden. If you find a leasehold house you want, factor in the cost of buying the freehold (enfranchisement) and negotiate the price accordingly.
For flats, leasehold is usually unavoidable, but the quality of the lease matters enormously. A flat with a 999-year lease, share of freehold, and a well-managed residents' company is as good as freehold in practice. A flat with 75 years on the lease, a remote freeholder charging high ground rent, and opaque service charges is a liability. When comparing flats, treat the lease terms as seriously as you treat the property itself — they determine your costs and your ability to sell for decades to come.
Key Takeaways
- ✓Freehold means you own the property and land outright with no time limit — it is the simpler and generally preferable tenure
- ✓Leasehold is a wasting asset that loses value as the lease shortens — below 80 years, costs rise sharply and mortgage options narrow
- ✓Share of freehold is the best tenure for flats, giving residents control over management, service charges, and lease extensions
- ✓The 2024 Act will extend standard lease extensions to 990 years and cap ground rent at zero — but implementation timelines are uncertain
- ✓For houses, always prefer freehold; for flats, scrutinise the lease length, ground rent, and service charge history before committing