What is the difference between leasehold and freehold?

When you’re buying a house you will often see the terms leasehold and freehold come up, but if you’ve been renting for a long time, you may not actually know what these terms mean. Knowing the difference is essential if you want to know exactly what it is you’re buying. And if you want to sell a leasehold property then you can come to us. Selling a property with a short leasehold can sometimes be difficult so keep this in mind (we will buy any property of course, but we’re talking about before you buy).

The different between freehold and leasehold

What does Freehold mean?


Freehold means you own the property outright, 100% this means, the property and the land it is build on. As the owner you are responsible for the property and the land which means you have to factor this in. Most houses are freehold, but in major cities there are far more leaseholds. You can also own a share of a freehold, for example if you buy a flat you will not actually own the land it is built on, but it is possible that you own a share of the land along with the other owners.

To get a share of the freehold, you will need to come together with the other leaseholders and serve a section 13. This is quite costly and it’s usually recommended that a company be set up to manage the building.

What does leasehold mean?


A leasehold means that you own the property, but lease the land from the freeholder. At the end of the lease ownership will return to the freeholder. You can normally extend this at a cost, usually flats are leaseholds, you own the flat, but not the building itself. Buying a leasehold means you need to consider how long there is left on the lease when you purchase the property. When it comes to flats this normally means there will be a building service charge and if the lease is short it can make it difficult to get a mortgage.

Can I sell a property with a short leasehold?


The length of the lease is very important, lenders are unlikely to give a mortgage if the lease is under 30 years and it’s recommended to purchase one with over 70 years. This also means it can be hard to sell a property with a short lease, and if you want to sell through traditional methods then you should look to extend the lease if possible.

Can I extend my lease?


You’ll qualify to extend the lease if you have more than 21 years on the original and have owned the property for 2 or more years. You will be charged for extending the leases and the amount with vary depending on the property and the length of the extension.

What rights do you have as a leaseholder?


If you feel you’re being asked to pay too much for your lease you can ask to see a summary of the service charge, proof of the calculations and receipts for any work done. The landlord should also consult you for any work over £250, anything that will cost you more than £100 a year and any actions that will take over a year. If you’re not happy with how things are being managed you can ask for the “right to manage” this will let you take some of the responsibilities from the owner.



Picture of Bobby Turner

Bobby Turner

Market research, writer & property specilaist for Zoom Property Buyer. Over 10 years in property sector. Previously at WhatHouse?