If you're buying 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, however what do they really mean? This easy guide lays out everything you need to know 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 indicates that you own the building as well as the land it stands on. Freehold and leasehold are the 2 main types of legally 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, but you have to rent the land it stands on from the freeholder. The freeholder owns the land. This is the regular form of ownership for flats.

How do I know 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 browse by postcode and look at a copy of the building owner's title. The title is a document that validates whether the residential or commercial property is freehold or leasehold.

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

Is freehold much better than leasehold?

Freehold purchases are much better than leasehold in regards to overall simpleness and complete ownership. Freehold residential or commercial properties tend to cost more upfront to purchase than leasehold, but leasehold residential or commercial properties often feature extra expenses and legal issues or limitations.

Leaseholder costs might consist of upkeep costs, yearly service fee, developing insurance coverage, and ground lease. Restrictions applying to leasehold residential or commercial properties may include things like:

- The leaseholder might need to get permission to do work on the residential or commercial property.

- The freeholder may not enable family pets.

- The leaseholder may not be enabled 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 building. The brand-new owner might then impose additional charges, such as an increase to any service charge, with little to no notification. Overall, when it concerns freehold vs. leasehold, owning a freehold residential or commercial property is simpler and less limiting than a leasehold.

Are there benefits 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 communal facilities such as a gym or resident lounge within a development. A leasehold residential or commercial property within a development might also provide benefits such as concierge services or covered parking.

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

What are the advantages of buying a freehold?

The main benefit of buying a freehold is that you own the land your residential or commercial property sits on. You do not need to pay any added fees or ground lease. You likewise don't need to seek permission to make changes to the residential or commercial property.

Freehold residential or commercial properties are also simpler to sell. The closer a lease is to expiring, the more difficult it is to offer a leasehold residential or commercial property. Mortgage rates also increase if the lease is under 70 years.

You can extend the lease on a residential or commercial property, however at an expense. Depending upon the staying time on the lease, extending can cost 10s of countless pounds. However, this is changing - see our update on the Leasehold and Freehold Reform Act at the bottom of this post.

Is it worth buying the freehold of my house?

It can be worth buying the freehold of your residential or commercial property if the lease has unfavourable terms - such as couple of remaining years, high service charges, and so on. However, be encouraged that buying the freehold on a leasehold residential or commercial property is frequently a costly and lengthy process.

Is a 999 year lease as good as freehold?

Having a 999-year lease is not the like having a freehold, it is simply a long leasehold. It has the exact same benefits and downsides as a much shorter lease, with the exception of not having to fret about the lease running out or requiring a renewal.

Having a 999-year leasehold still wouldn't excuse you from paying any necessary ground rent and service fee to the present freeholder, for example. The long lease time just takes away among the main causes for issue regarding this plan.

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 exact same type, due to the fact that of the risks connected to leasing. The main concern being the variety of remaining years on the lease. However, this is just a general pattern, not an absolute rule.

Does a freehold suggest 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 up until you pick to offer it.

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For how long does a freehold last?

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

The length of time 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 rapidly drop in value. For example, a residential or commercial property with a 60-year lease deserves 10 percent 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 reverts to the freeholder. This indicates that the freeholder now owns the residential or commercial property.

It used to be the case that if you have actually resided in a residential or commercial property for more than 2 years, you deserve to 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 spend for this extension. Extension costs can cost up to 20 per cent of your residential or commercial property's value. Again, the just recently signed Reform Act aims to make this more affordable.

Can you turn a leasehold into a freehold?

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

- The building requires to include at least 2 apartment or condos.

- At least 75% of the building is used for domestic purposes.

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

- At least half of the leaseholders desire to buy a share of the freehold.

- If there are only two flats in the structure, both leaseholders should want to purchase the freehold.


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

Can a freeholder refuse to offer the freehold to leaseholders?

Freeholders can not decline to sell the freehold to leaseholders of flats on the residential or commercial property, if they fulfill the listed requirements. It is a legal right for leaseholders to have the alternative to buy out the freehold if they fulfill these requirements.

What do leaseholders typically challenge with freeholders?

Common conflicts made by leaseholders versus freeholders include the expense of annual service charges. 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 a lack of control over how and when major works are done. 18% experience problems when significant works are brought out, such as extreme noise or disruption.

Freehold vs. leasehold: which is much better?

The concern of freehold vs. leasehold is not an uncomplicated one. Buying a freehold residential or commercial property is normally easier and more versatile than a leasehold. However, most flats are leasehold residential or commercial properties.

If you are purchasing a leasehold, you should examine how long is left on the lease. The worth of a leasehold residential or commercial property is connected to the length of its staying lease. The longer left on the lease, the better.

It's also worth inspecting just how much the ground rent and service fee are if purchasing a leasehold residential or commercial property. Also, check whether you get access to any communal facilities or other advantages.

If you actually do not desire to reside in a leasehold residential or commercial property and you get on well with your neighbours, you might want to consider purchasing the freehold outright. Keep in mind that you'll require a minimum of 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 many years. The first phase of the Leasehold Reforms (and Ground Rent) Bill entered into result at the end of June 2022. The main headline change then was that ground rents were eliminated for brand-new residential or commercial properties. This stays excellent news if you plan to buy a leasehold residential or commercial property to live in or rent out.

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

Update May 2024: Leasehold and Freehold Reform Act becomes law

On 24th May 2024, the Leasehold and Freehold Reform Act ended up being law. While a few of the arrangements initially described in the preliminary costs have actually been dropped, it has kept a variety of changes that will make it easier and cheaper for leaseholders to reside in, rent, or otherwise manage their residential or commercial property. Some of the main provisions of the new law consist of:

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

- Removing the requirement for new leaseholders to have owned their home or flat for 2 years before these modifications apply to them.

- Making purchasing or selling a leasehold residential or commercial property quicker and much easier, with a maximum time and fee for the arrangement of details to a leaseholder by the freeholder.

- Requiring transparency over service charges for leaseholders. I.e.: Freeholders or their management business must show clearly and transparently how they charge for all aspects of their service charge costs.

- Replacing buildings insurance coverage commissions with a transparent administration charge for managing representatives, property managers and freeholders.

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

- Scrapping the anticipation that leaseholders should pay the freeholders' legal expenses when challenging poor practice.

- Granting freehold house owners on private and mixed period estates the exact same rights of redress as leaseholders.

- Building on the legislation in the Building Safety Act 2022, that makes sure freeholders and developers are not able to leave their liabilities to fund building removal work.

- Allowing leaseholders in structures with up to 50% non-residential floorspace to buy their freehold or take control of its management. This is a boost from the existing 25% limit.


These legal rights and protections represent a continued effort to make leasehold residential or commercial properties less pricey and complicated to own. This is great news for anybody wanting to buy this type of residential or commercial property now or in the coming years. The HomeOwners Alliance has even more in-depth information about the main topics of dispute for leasehold law modifications, so have a look if you wish to discover out more.

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

HomeViews is the only independent evaluation platform for property advancements in the UK. Prospective buyers and occupants use it to make a notified choice on where to live based upon insights from carefully confirmed resident evaluations. Part of Rightmove considering that February 2024, we're dealing with developers, house home builders, operators, housing associations and the Government to offer residents a voice, acknowledge high entertainers and to assist enhance standards across the industry.