Leasehold vs freehold: what is the difference?

Once a lease drops below 80 years, the price of extending it includes marriage value: a share of the uplift in value the extension creates. The same lease can cost noticeably more to extend at 79 years than at 81.

Many lenders want somewhere between 70 and 85 years left, and often a set number of years beyond the end of the mortgage term. Requirements vary, so check with your broker before you offer on a short lease.

Since 31 January 2025, you no longer need to have owned a property for two years before using the legal right to extend the lease or buy the freehold. A seller can also start the process and pass the claim to you.

Under the current rules, a flat lease extended through the legal process gains 90 years with ground rent reduced to zero. A house lease gains 50 years. Owners can also agree an informal extension with the freeholder, but the terms are less protected.

Flat owners jointly own the freehold of their building, usually through a company, and each still holds a lease. Because the owners control the freehold, they can usually extend their own leases cheaply, but they also share the decisions and the costs of running the building.

Each owner holds their flat outright with no end date, and an association of owners runs the shared parts. It has existed since 2002 but is rare. The draft reform bill would make it the standard for new flats.

Some houses, mainly new builds sold in the 2000s and 2010s, were sold leasehold, sometimes with rising ground rent. A ban on most new leasehold houses has been passed but is not yet in force.

On some newer estates, freehold owners pay a management company for roads, lighting and open space that the council has not adopted. Ask what the charge is, how it can rise and what it covers before you buy.

Freehold means you own the building and the land it stands on, with no time limit. Leasehold means you own the right to live in the property for the length of a lease, while a freeholder owns the land. Most houses in England and Wales are freehold and almost all flats are leasehold.

Not in itself. It is the normal way to own a flat in England and Wales. The risks are in the detail: a short lease, rising ground rent, high or unpredictable service charges and restrictive terms. A long lease with fair, stable charges is perfectly mortgageable and sellable.

It is a share of the increase in value that extending a lease creates, payable to the freeholder when a lease has less than 80 years left. It is why extending at 81 years usually costs much less than at 79. Its abolition has been passed in law but is not yet in force.

Most long leaseholders have a legal right to extend, and since January 2025 you can do it straight after buying. A flat lease currently gains 90 years with ground rent reduced to zero, and a house lease gains 50 years. You pay a premium plus the freeholder's reasonable legal and valuation costs.

The estate agent and seller should tell you, and your conveyancer will confirm it. You can also download the title register from HM Land Registry, which shows the tenure and, for leasehold, the lease details.

The property reverts to the freeholder, although residents have some legal protections. In practice the problems start decades earlier: a short lease is hard to mortgage, hard to sell and expensive to extend, so extend well before it falls below 80 years.

Not for homes in the usual sense. Flats and houses in Scotland are owned outright, with shared repairs set out in the title deeds, and most very long leases were converted to ownership in 2015. Leasehold is common in Northern Ireland, where ground rents can usually be bought out.

It is a form linked to building-safety protections for leaseholders in England. It helps show whether a qualifying leaseholder is protected from certain costs of fixing historic safety defects, such as unsafe cladding.