If you're purchasing residential or commercial property in the UK, you'll need to understand whether the purchase will be freehold or leasehold. You may have become aware of these terms before, but what do they in fact mean? This basic guide details everything you need to learn about freehold vs. leasehold and how every one impacts how you own your residential or commercial property.

Leasehold vs. freehold FAQs

What is freehold?

Buying a residential or commercial property freehold merely means that you own the structure as well as the land it stands on. Freehold and leasehold are the two primary kinds of lawfully owning residential or commercial property in the UK. Freehold is the regular type of ownership for homes.

What is leasehold?

A leasehold purchase indicates that you own the house/flat/relevant structure, however you have to rent the land it bases on from the freeholder. The freeholder owns the land. This is the regular kind of ownership for flats.

How do I understand if a residential or commercial property is freehold?

To discover if a residential or commercial property is leasehold or freehold you can check the Land Registry site. Here, you can search by postcode and take a look at a copy of the building owner's title. The title is a document that verifies whether the residential or commercial property is freehold or leasehold.

If you already owned the residential or commercial property and were asked to sign a lease agreement during the purchase, then your residential or commercial property is leasehold.

Is freehold much better than leasehold?

Freehold purchases are better than leasehold in terms of general simplicity and complete ownership. Freehold residential or commercial properties tend to cost more in advance to buy than leasehold, but leasehold residential or commercial properties often include additional expenses and legal problems or restrictions.

Leaseholder costs may consist of upkeep charges, annual service fee, constructing insurance coverage, and ground rent. Restrictions applying to leasehold residential or commercial properties might consist of things like:

- The leaseholder may need to get approval to do deal with the residential or commercial property.

- The freeholder might not permit animals.

- The leaseholder might not be permitted to sublet the residential or commercial property.


Also, the freeholder can pick to sell a residential or commercial property's title while a leaseholder is residing in the structure. The brand-new owner might then impose surcharges, such as an increase to any service fee, with little to no notice. Overall, when it pertains to freehold vs. leasehold, owning a freehold residential or commercial property is simpler and less limiting than a leasehold.

Exist advantages to owning a leasehold residential or commercial property?

There can be advantages to owning a leasehold residential or commercial property. These may consist of having access to common centers such as a gym or resident lounge within an advancement. A leasehold residential or commercial property within a development may also supply benefits such as concierge services or covered parking.

If work requires to be done on the residential or commercial property, the freeholder is accountable for arranging it. However, the leaseholder will typically have to contribute towards the cost of the works.

What are the benefits of purchasing a freehold?

The main advantage of buying a freehold is that you own the land your residential or commercial property sits on. You do not need to pay any extra charges or ground rent. You likewise do not need to seek permission to make modifications to the residential or commercial property.

Freehold residential or commercial properties are also much easier to sell. The closer a lease is to ending, the harder it is to sell a leasehold residential or commercial property. Mortgage rates likewise increase if the lease is under 70 years.

You can extend the lease on a residential or commercial property, but at a cost. Depending upon the remaining time on the lease, extending can cost tens of countless pounds. However, this is changing - see our upgrade on the Leasehold and Freehold Reform Act at the bottom of this article.

Is it worth buying the freehold of my home?

It can be worth buying the freehold of your residential or commercial property if the lease has unfavourable terms - such as few remaining years, high service fee, etc. However, be advised that purchasing the freehold on a leasehold residential or commercial property is frequently a pricey and time-consuming process.

Is a 999 year lease as good as freehold?

Having a 999-year lease is not the very same as having a freehold, it is simply a really long leasehold. It has the very same advantages and downsides as a much shorter lease, with the exception of not needing to stress over the lease running out or requiring a renewal.

Having a 999-year leasehold still wouldn't exempt you from paying any needed ground lease and service charges to the current freeholder, for example. The long lease time just removes among the primary causes for concern regarding this arrangement.

Are freehold houses worth more than leasehold?

Leasehold residential or commercial properties do tend to be cheaper than freehold residential or commercial properties of the very same type, due to the fact that of the risks attached to leasing. The primary concern being the number of staying years on the lease. However, this is just a general trend, not an outright rule.

Does a freehold mean you own the land?

If you own the freehold, you own the residential or commercial property and the land it bases on. The title for the residential or commercial property will list you as the freeholder. You will have total ownership over that land until you select to sell it.

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What is a service fee? Why do I pay it?

The length of time does a freehold last?

The freehold on a residential or commercial property lasts up until the owner decides to offer it. At the point of sale, the freehold then transfers to the new owner.

For how long does a leasehold last?

Leaseholds last for a set number of years. Standard leasehold lengths are 90 or 120 years. However, leaseholds can last as long as 999 years.

As the length of the lease decreases, so does the value of the residential or commercial property. Short-lease residential or commercial properties can quickly drop in worth. For instance, a residential or commercial property with a 60-year lease deserves 10 per cent less than one with a 90-year lease.

What occurs when a leasehold goes out?

When a leasehold ends, the ownership of the land and the residential or commercial property goes back to the freeholder. This indicates that the freeholder now owns the residential or commercial property.

It utilized to be the case that if you have actually lived in a residential or commercial property for more than 2 years, you can extend the lease by 90 years. Now, thanks to the Leasehold and Freehold Reform Act, this is no longer a requirement. However, you would have to pay for this extension. Extension charges can cost approximately 20 per cent of your residential or commercial property's worth. Again, the just recently signed Reform Act aims to make this less expensive.

Can you turn a leasehold into a freehold?

In certain scenarios, you can turn a leasehold into a freehold. Leaseholders of flats can buy the freehold for their residential or commercial property with particular limitations. These include:

- The structure requires to consist of a minimum of 2 apartment or condos.

- A minimum of 75% of the structure is used for domestic functions.

- At least 75% of the flats are owned by leaseholders who own long leases of a minimum of 21 years.

- A minimum of half of the leaseholders want to purchase a share of the freehold.

- If there are just 2 flats in the structure, both leaseholders should wish to purchase the freehold.


Once a group of leaseholders have actually bought the freehold, they can set their own ground rents and service fee. However, they are then responsible for keeping the building.

Can a freeholder refuse to offer the freehold to leaseholders?

Freeholders can not refuse to offer the freehold to leaseholders of flats on the residential or commercial property, if they meet the listed requirements. It is a legal right for leaseholders to have the option to purchase out the freehold if they meet these criteria.

What do leaseholders commonly contest with freeholders?

Common disagreements made by leaseholders versus freeholders involve the cost of yearly service fee. The HomeOwners Alliance says that 26% of all leaseholders in the UK feel that they are being overcharged by their freeholder.

Similarly, 23% of leaseholders grumble that they have an absence of control over how and when major works are done. 18% experience problems when significant works are performed, such as excessive noise or interruption.

Freehold vs. leasehold: which is better?

The question of freehold vs. leasehold is not a simple one. Buying a freehold residential or commercial property is usually simpler and more flexible than a leasehold. However, most flats are leasehold residential or commercial properties.

If you are buying a leasehold, you must examine how long is left on the lease. The value of a leasehold residential or commercial property is tied to the length of its remaining lease. The longer left on the lease, the much better.

It's likewise worth examining just how much the ground lease and service fee are if buying a leasehold residential or commercial property. Also, examine whether you get access to any common facilities or other benefits.

If you really do not desire to reside in a leasehold residential or commercial property and you get on well with your neighbours, you might desire to consider buying the freehold outright. Keep in mind that you'll need at least half the other leaseholders on board to do this. Buying a share of freehold is the most common way to turn a leasehold into freehold residential or commercial property.

Recent changes to leaseholds

There's been a significant reform of UK leasehold law on the cards for years. The first phase of the Leasehold Reforms (and Ground Rent) Bill came into result at the end of June 2022. The primary heading modification then was that ground rents were eliminated for brand-new residential or commercial properties. This remains great news if you intend to buy a leasehold residential or commercial property to reside in or rent.

The brand-new law also indicates that if you currently have a leasehold residential or commercial property, the ground rent can not be increased. Once your existing lease term expires, the new contract must, by law, charge zero ground rent. Additionally, ground lease can no longer be charged on retirement residential or commercial properties.

Update May 2024: Leasehold and Freehold Reform Act ends up being law

On 24th May 2024, the Leasehold and Freehold Reform Act ended up being law. While some of the provisions initially laid out in the initial expense have been dropped, it has kept a number of changes that will make it easier and cheaper for leaseholders to live in, lease, or otherwise manage their residential or commercial property. A few of the primary provisions of the brand-new law include:

- Banning new leasehold houses in England and Wales - however not on brand-new flats.

- Making it more affordable and easier to extend your lease or purchase the freehold for existing leaseholders in both houses and flats.

- Increasing the standard lease extension term to 990 years, up from the existing 90 years, with ₤ 0 ground lease.

- Removing the requirement for new leaseholders to have actually owned their home or flat for two years before these modifications apply to them.

- Making buying or selling a leasehold residential or commercial property quicker and easier, with a maximum time and charge for the provision of details to a leaseholder by the freeholder.

- Requiring transparency over service charges for leaseholders. I.e.: Freeholders or their management business need to reveal plainly and transparently how they charge for all aspects of their service charge costs.

- Replacing buildings insurance commissions with a transparent administration charge for handling representatives, landlords and freeholders.

- Extending access to "redress" schemes for leaseholders who feel they have actually been a victim of bad practice.

- Scrapping the anticipation that leaseholders must pay the freeholders' legal expenses when challenging bad practice.

- Granting freehold homeowners on personal and combined tenure estates the very same rights of redress as leaseholders.

- Building on the legislation in the Building Safety Act 2022, that ensures freeholders and designers are unable to leave their liabilities to money structure removal work.

- Allowing leaseholders in structures with as much as 50% non-residential floorspace to purchase their freehold or take control of its management. This is an increase from the current 25% limit.


These legal rights and securities represent a continued effort to make leasehold residential or commercial properties less pricey and complex to own. This is excellent news for anyone looking to purchase this type of residential or commercial property now or in the coming years. The HomeOwners Alliance has even more extensive details about the primary subjects of debate for leasehold law changes, so take a look if you desire to discover more.

If you require more guidance on legal terms and problems around residential or commercial property purchases, our guides section has everything you need. We have guides on conveyancing, transfer of equity, ground rent and much more. We hope that this freehold vs leasehold guide offers you the right starting knowledge to help pick the right residential or commercial property for your needs.

HomeViews is the only independent evaluation platform for residential advancements in the UK. Prospective buyers and occupants use it to make a notified choice on where to live based upon insights from thoroughly verified resident evaluations. Part of Rightmove since February 2024, we're working with developers, home contractors, operators, housing associations and the Government to give residents a voice, identify high performers and to help enhance standards across the industry.