When you're looking at properties, you’ll see two terms crop up constantly: leasehold and freehold. Understanding the difference matters, because it affects what you actually own, what you’ll pay, and how much control you have over your home.
Freehold ownership means you own both the property and the land it stands on outright. There’s no time limit, no landlord, and no ground rent.
As a freeholder, you’re responsible for all maintenance, repairs, and insurance. This gives you full control over the property - but also full responsibility. Want to extend your kitchen or paint your front door purple? It’s your decision (planning permission aside).
Freehold ownership is generally preferred because of the autonomy it provides, particularly for houses.
Leasehold means you own the property for a set period of time, but not the land underneath it. Someone else - the freeholder - owns the land.
Most flats are leasehold because multiple people share the same building and land. You’ll also find some houses sold as leasehold, particularly in certain parts of England.
When you buy leasehold, you’re buying the right to live in the property for the length of the lease. This is known as the lease term. It could be 99 years, 125 years, 250 years, or longer. Leases under 80 years are considered short leases, which can affect both property value and mortgage availability.
When the lease eventually expires, ownership returns to the freeholder. You can extend the lease at any time, but the cost varies and usually includes a premium plus legal and valuation fees.
Leasehold isn’t inherently a problem, many people live happily in leasehold properties for decades, but understanding the terms is crucial.
Leasehold properties usually require ground rent - an annual payment to the freeholder. This can range from a few pounds to several hundred pounds a year, and some leases include clauses that increase the amount over time.
Freehold properties don’t have ground rent.
If you own a leasehold flat, you’ll typically pay service charges to cover things like communal area maintenance, building insurance, and repairs to shared parts of the building.
The freeholder or management company arranges building insurance for the whole building, and you pay your share through the service charge. This means less control over the insurer or cover level, but it’s often more straightforward than arranging it yourself.
It’s also worth noting that conveyancing and legal fees for leasehold properties are often higher than for freehold homes because of the additional checks involved.
The shorter the lease, the harder it becomes to sell or remortgage. Most mortgage lenders want at least 70–80 years remaining, and many prefer longer.
If a lease drops below this level, extending it becomes increasingly expensive. A lease that looks long today won’t stay that way forever - a 99-year lease becomes a 79-year lease surprisingly quickly.
These rules are set out in the lease, so it’s important to read it carefully before committing.
Freehold owners generally have far more freedom, although planning rules and building regulations still apply.
Historically, some developers sold new-build houses as leasehold to create ongoing income from ground rent. This practice attracted widespread criticism and is now far less common, but leasehold houses still exist.
If you’re considering a leasehold house, think carefully. You’ll have the maintenance responsibilities of a house owner, but with the added costs and restrictions of leasehold.
Sometimes, yes.
Flat owners may be able to buy the freehold of their building together - known as collective enfranchisement. This often involves purchasing a share of the freehold with other flat owners, giving you more control over management and costs.
House leaseholders may also have the right to buy their freehold outright.
The process involves legal work and costs money, and it can be complex, especially when multiple owners are involved. However, it removes ground rent and gives you greater long-term control.
You might occasionally come across flying freehold (where part of your property sits above someone else’s land) or commonhold (where flat owners collectively own and manage the building without leases).
Both are relatively uncommon, but your solicitor can explain the implications if they apply to a property you’re considering.
If you move frequently for training rotations or new roles, think about how easy the property will be to sell. Short leases can complicate quick moves.
Service charges and ground rent add to monthly outgoings. Factor these in alongside your mortgage, particularly during training years when income may be lower or less predictable.
A lease that looks healthy today may affect value in the future. Long leases are easier to sell and remortgage, while freehold generally offers the most flexibility.
If you plan to rent out your property later - for example during a temporary placement elsewhere - check whether the lease allows subletting. Many leasehold properties restrict this.
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