Leasehold vs Freehold: What’s the Difference?
Quick answer: With freehold you own the property and the land it stands on outright, with no end date. With leasehold you own the right to occupy the property for a fixed term (for example 99 or 125 years) while a freeholder owns the building and land, and you usually pay ground rent and service charges. Most flats in England and Wales are leasehold and most houses are freehold. As of November 2026, the main 2024 leasehold reforms on lease extensions and marriage value have not yet come into force, and a proposed £250 cap on ground rent is still a draft bill.
Leasehold vs freehold at a glance
| Freehold | Leasehold | |
|---|---|---|
| What you own | The building and the land, with no end date | The right to live in the property for a set number of years |
| Typical property | Houses | Flats (and some new-build houses) |
| Ground rent | None | Often, unless it is a peppercorn (zero) lease |
| Service charge | None (some estates charge a management fee) | Usually, for shared areas, buildings insurance and repairs |
| Permission for works | Planning rules only | Often need the freeholder’s consent too |
| Value over time | Not affected by lease length | Falls as the lease gets shorter, especially below 80 years |
What is freehold?
Freehold is outright ownership. You own the building and the land, you are responsible for all repairs and insurance, and there is no landlord above you. Most houses in England and Wales are sold freehold. Some new-build estates charge freehold owners an estate management fee for roads and green spaces, so ask about this before you buy.
What is leasehold?
A leasehold is a long tenancy. You buy the right to live in the property for the length of the lease, and the freeholder (the landlord) keeps ownership of the building and land. Leases on new flats are often 99, 125 or 999 years. The lease sets out what you pay, what you can and cannot do (for example subletting, pets or alterations) and who repairs what.
Costs leaseholders usually pay
- Ground rent: a yearly payment to the freeholder. Since 30 June 2022, most new residential long leases must have a peppercorn (zero) ground rent, but older leases can still charge it, sometimes with rising terms.
- Service charge: your share of cleaning, maintenance, buildings insurance, management and repairs to shared parts. It can change every year.
- Major works: large repairs such as a new roof or lifts, sometimes paid from a reserve (sinking) fund or as a one-off bill.
- Admin fees: for things like permission to sublet or alter the flat.
Why lease length matters
A lease is a wasting asset: every year it gets shorter and, once it drops below about 80 years, the property usually loses value faster and extending it gets more expensive, because under the current rules a share of “marriage value” is added to the price of extending. Many lenders are wary of short leases, so check the remaining term before you make an offer. Your conveyancer will confirm it.
| Years left on the lease | What it usually means |
|---|---|
| 125 years or more | Few concerns for buyers or lenders |
| 90 to 125 years | Generally fine, but plan ahead |
| 80 to 90 years | Consider extending before it drops below 80 |
| Under 80 years | Marriage value applies under current rules; extension costs rise |
| Under about 70 years | Some lenders may not lend; harder to sell |
Extending a lease or buying the freehold
Flat owners can usually ask for a statutory lease extension. Under the current law this adds 90 years to the lease with no ground rent. Since early 2025 you no longer need to have owned the flat for two years before you can do this. Flat owners in a building can also club together to buy the freehold (collective enfranchisement), and house leaseholders can usually buy their freehold. Get a specialist valuation and a solicitor before you start.
Share of freehold means the flat owners jointly own the freeholding company. You still have a lease, but you control the building and can usually extend your own lease cheaply.
Leasehold reform: where things stand in November 2026
- Leasehold and Freehold Reform Act 2024: it is law, but only some parts are in force. The two-year ownership rule was removed in early 2025 and Right to Manage changes started in March 2025.
- Not yet in force: the standard 990-year lease extension and the removal of marriage value. These need further legislation, and no start date has been set.
- Draft Commonhold and Leasehold Reform Bill (January 2026): proposes capping ground rent on existing leases at £250 a year, falling to a peppercorn after 40 years, and making commonhold the default for new flats. It is a draft, not law, and the government’s impact assessment expects the ground rent cap to apply from 2028 at the earliest.
If your lease is approaching 80 years, waiting for the reforms is a gamble. Get advice on what an extension would cost now and how a delay could change that.
Which is better to buy?
Freehold gives you control and no ongoing landlord costs, but you pay for everything yourself. Leasehold is normal for flats and fine if the lease is long, the ground rent is low or zero, and the service charge is reasonable for the building. Before buying a leasehold flat, ask for the last three years of service charge accounts, the planned major works, the reserve fund balance and the ground rent terms. Then work out your full monthly cost with our mortgage calculator and budget for stamp duty.
Frequently asked questions
What is the difference between leasehold and freehold?
Freehold means you own the property and the land outright with no end date. Leasehold means you own the right to live in the property for a fixed number of years, while a freeholder owns the building and land.
Are flats always leasehold?
Almost all flats in England and Wales are leasehold or share of freehold. The draft Commonhold and Leasehold Reform Bill proposes making commonhold the default for new flats, but it is not yet law.
Has marriage value been abolished?
Not yet. The Leasehold and Freehold Reform Act 2024 provides for removing marriage value, but as of November 2026 that part has not come into force and no start date has been set.
Is ground rent capped at £250?
Not yet. A £250 yearly cap on ground rent for existing leases, falling to a peppercorn after 40 years, is in the draft Commonhold and Leasehold Reform Bill published in January 2026. It still has to pass Parliament.
How many years should be left on a lease?
Ideally 90 years or more. Below 80 years, extending usually becomes more expensive under current rules, and some lenders are reluctant to lend on very short leases.
Sources
- GOV.UK: Leasehold property
- GOV.UK: Draft Commonhold and Leasehold Reform Bill (January 2026)
- House of Commons Library: Leasehold reform in England and Wales, what’s happening and when?
Figures checked on 1 November 2026. This article is general information, not legal or financial advice.
