When purchasing property in the UK, buyers will encounter two primary forms of ownership: leasehold and freehold. Understanding the distinction is essential for long-term planning, resale value, and legal control.
Freehold means you own the property and the land it stands on outright. You are responsible for maintenance and have full autonomy over alterations, subject to planning permission.
Leasehold means you own the property for a fixed term but not the land. The freeholder retains ownership of the land and may charge ground rent, service fees, and impose restrictions on alterations.
Key Differences and Risks
Freehold Advantages
- Full ownership of land and property
- No ground rent or service charges
- Greater control over renovations and use
- Typically preferred for houses and long-term investment
Leasehold Considerations
- Ownership limited to a fixed term (often 99–125 years)
- Subject to ground rent, service charges, and management fees
- Requires freeholder consent for major works
- Common in flats, new builds, and shared developments
Risks of Leasehold
- Escalating ground rent clauses
- Short leases reducing mortgage eligibility and resale value
- Disputes with managing agents or freeholders
- Hidden service charges and restrictive covenants
Extending or Buying the Freehold
Leaseholders may extend their lease or purchase the freehold, subject to eligibility and valuation. Flats require collective enfranchisement, while houses may be eligible for individual freehold acquisition.
For official guidance, refer to: Leasehold Property: Overview – GOV.UK
FAQs and Disclaimer
Is leasehold bad for resale? Short leases and high ground rent can deter buyers. Always check the term and charges before committing.
Can I convert leasehold to freehold? Yes, subject to legal eligibility and valuation. Flats require collective action.
Are leasehold properties cheaper? Often yes, but long-term costs may outweigh initial savings.
Do I need permission to renovate a leasehold flat? Major works typically require freeholder consent.
Disclaimer This page is provided for general informational purposes only. We are not solicitors or tax advisors, and this content does not constitute legal advice. Buyers should seek professional guidance tailored to their individual circumstances.