Leasehold means you own the property for a limited time; freehold means you own both the property and the land indefinitely. Freeholders have more control and no ground rent.
When buying a property in England and Wales, one of the first things you’ll encounter is the question of ownership structure — specifically, whether the property is leasehold or freehold. These two terms determine what exactly you own, your rights and responsibilities, and what might happen over time.
Understanding the distinction is essential, especially if you’re buying a flat, planning to extend a lease, or thinking about enfranchisement.
This guide breaks down the differences between leasehold and freehold, how they work in practice, and what they mean for homeowners.
What Is Freehold?
A freeholder owns:
- The property itself (building or house)
- The land it stands on
Freehold ownership is the most complete form of property ownership. It’s indefinite, and there’s no landlord above you.
Key Features:
- You own the property outright
- No ground rent or lease-related restrictions
- Full responsibility for maintenance and insurance
- Common for houses
Freehold properties offer long-term stability and are generally considered simpler and more secure to own.
What Is Leasehold?
A leaseholder owns:
- The right to occupy and use a property (usually a flat)
- For a fixed number of years (e.g. 99, 125, or 999 years)
You do not own the land, and you are not the legal owner of the building — the freeholder retains that interest.
Key Features:
- The property reverts to the freeholder when the lease expires (unless extended)
- You may pay ground rent, service charges, and building insurance contributions
- The lease contains covenants (rules) you must follow
- Common for flats and maisonettes
Leasehold ownership is more limited and complex, but it’s the standard structure for apartments in the UK.
Key Differences at a Glance
| Feature | Freehold | Leasehold |
| Owns land? | ✅ Yes | ❌ No |
| Time-limited ownership? | ❌ No | ✅ Yes (e.g. 99–125 years) |
| Ground rent payable? | ❌ No | ✅ Often (unless extended) |
| Service charges? | ❌ Rare | ✅ Common |
| Alteration restrictions? | ❌ Unlikely | ✅ Often restricted |
| Can expire? | ❌ No | ✅ Yes — lease must be extended |
What Happens When a Lease Runs Down?
The shorter your lease becomes:
- The more its value declines
- It becomes harder to sell or remortgage
- The cost of extending increases (especially under 80 years due to marriage value)
This is why many leaseholders choose to:
- Extend the lease via the statutory route
- Buy the freehold (individually or with neighbours)
Why Are Most Flats Leasehold?
In multi-occupancy buildings (e.g. blocks of flats):
- A freeholder is needed to manage the building structure, roof, communal areas
- Leasehold allows individual ownership of units while maintaining control over shared areas
However, leasehold has drawn criticism due to:
- Escalating ground rent clauses
- Unreasonable service charges
- Limited control over management
Newer reforms and the introduction of commonhold aim to address some of these concerns.
Can Leaseholders Become Freeholders?
Yes — through a process called enfranchisement. Leaseholders may:
- Buy the freehold of their building collectively (flats)
- Buy the freehold of their individual home (houses)
Alternatively, they can:
- Extend the lease (to 90 years and reduce ground rent to zero)
- Take over management responsibilities via Right to Manage
What Is Commonhold?
Commonhold is a newer type of ownership where:
- You own your flat outright (like freehold)
- You share responsibility for communal areas with other unit owners
Commonhold avoids leases altogether — but uptake has been limited.
FAQs
Can I convert leasehold to freehold?
Possibly — if you own a house, or if enough flat owners in your building agree to buy the freehold.
Do I need to extend a lease on a freehold?
No — only leaseholders need to extend their term. Freehold ownership is indefinite.
What if my lease is under 80 years?
Act quickly — costs rise due to marriage value. Seek advice from a lease extension specialist.
Is freehold always better?
Not always. Flats need shared management, which leasehold structures help provide. But freehold gives more control and avoids ground rent.
Summary: Leasehold vs Freehold
| Question | Freehold | Leasehold |
| Do I own the land? | ✅ Yes | ❌ No |
| Do I pay ground rent? | ❌ No | ✅ Usually |
| Can I make alterations freely? | ✅ Yes | ⚠️ With restrictions |
| Can my ownership expire? | ❌ No | ✅ Yes, unless extended |
Need Help Understanding Your Leasehold Position?
At Extension.Lease, we guide leaseholders through:
- Understanding their lease structure
- Planning lease extensions
- Exploring freehold purchase opportunities
