What is freehold vs leasehold?

Buying your first home and not sure what freehold and leasehold mean?

Find out the major differences here.

Freehold vs leasehold in short

These terms may sound complicated, but they have two simple meanings:

  • Freehold – you own the property and the land it’s built on.
  • Leasehold – you own the property for a set period, but not the land it’s built on.
 

What is a freehold property?

With a freehold, you own the house and the land it’s built on, including outdoor spaces like gardens. There are no leases to consider, and you won’t have to pay ground rent or any maintenance fees.

Freehold is the most common way to buy a house in the UK.

Buying the freehold

If you’re living in a leasehold property, someone else owns the freehold. It might be possible to buy the freehold, but not always.

At any time, you can ask to buy the freehold from the landlord. There's no obligation for the freeholder to sell, but if eligible under the leasehold reform act, you could pursue a legal claim.

You'll need a conveyancer experienced in the matters to handle your case.

What is a leasehold property?

Leasehold is where you buy the property, but not the land it’s on. The land is still owned by the freeholder, who is selling the property for a set period. It’s more common with flats, but there are leasehold houses too.

Leaseholds usually last between 125 and 999 years. If you buy a leasehold property, you might be able to extend how long you own it for, unless your leasehold agreement states otherwise. Shared spaces, like gardens and hallways, are typically the responsibility of the landlord.

This means if there’s any damage or work needed, they’ll usually sort it out. You’ll pay them a service charge to cover this, as well as ground rent.

Extending a leasehold

What about properties with short leases? You can ask the landlord if they’ll extend the contract. You might be able to extend your lease by:

Differences between a freehold and a leasehold property

Here are the key differences between freehold and leasehold properties:

Property ownership – With freehold, you own the property and the land it’s built on. With leasehold, you own the property for a set period but not the land.

Gardens – With a freehold property, you own the gardens. It’s your responsibility to maintain them. With leasehold, you do not own the shared gardens. The landlord is responsible for maintenance. Unless your leasehold agreement states otherwise.

Service charges – With freehold, there are no set charges, but you are responsible for the property’s upkeep. With leasehold, you’ll pay ground rent and other service charges.

Remortgaging – You can remortgage a freehold property. For leasehold properties, most lenders generally want to see at least 70 years remaining on the lease. 

Let’s take a closer look

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Are you getting ready to take your first step on the property ladder?
We're here to offer guidance along each step of your journey, to make it as simple as possible.

First time buyer help hub