Freehold & Leasehold ... Whats The Difference?

When looking to buy a property, you will hear many unfamiliar expressions, words used by professionals that you may not fully understand. Two phrases you will hear over and over again when searching for a property to buy are ‘freehold property’ and ‘leasehold property’. It is essential to know the difference between the two types of property.

What is a freehold property?

Freehold properties tend to be residential houses, the term freehold means you own the property and the land the property stands upon

What is a leasehold property?

Leasehold properties tend to be apartments where you own your property but not the land or communal areas. This is why you find the majority of apartments in England & Wales (Scotland differs) are leasehold, and a 'freeholder' will own both the land and property surrounding your apartment.

Advantages to freehold property 

  • You don’t have worry about the lease running out
  • No ground to be paid
  • You are the sole owner.
  • You can do with the property as you wish within the confines of the law and local authority.

Disadvantages of a freehold property 

  • The purchase price of the property will be higher for a similar sized property
  • Responsibility for the upkeep of the land any communal areas is yours
  • You have a responsibility to your local council and community to be a responsible homeowner. If the building falls into disrepair, you are too noisy, or your rubbish is a nuisance to the neighbours you are legally and financially obligated to take action.
  • If apartments you will responsible for the upkeep of the communal areas alongside other owners in the block, this can be difficult when arranging repair and payments.
  • You won't find as many facilities in the building if they are apartments, such as gym/cinema room, laundry facilities.

 Advantages of leasehold property 

  • Leasehold property is cheaper than freehold
  • Fully managed
  • Communal areas maintained
  • More communal areas like gyms etc
  • No obligation by the apartment owner to the local council to maintain the upkeep of the exterior of the building

Disadvantages of leasehold property 

  • Ground rent & Service charges to pay (our blog on Service Charges explains in more detail some misconceptions)
  • The lease coming to an end
  • Negotiating the extension on the lease

The United Kingdom is seeing a gradual rise in the younger generation preferring apartment living to houses, and this rise puts England & Wales closer to most European countries where apartment living is the preferred accommodation.  This is for a number of reasons, but mainly because people want to live close to the city centres and main sources for employment, and due to lack of space in most cities then developers are building up (apartments) rather than out.  You will find that majority of investment buy to let city centre apartments and purpose built student accommodation will be leasehold, this due to them being developed in blocks and towers and requirement of communal areas and facilities such as cinema rooms, gyms etc.  Most investors look for a hands free investment which leasehold provides.  If you were looking at purchasing a freehold apartment bear in mind the responsibility and how a collective of owners will maintain, repair and upkeep any external areas.  How payments for any repairs or upkeep will be done, will you have a fund all owners pay into, will owners agree? Remember your purchase price will be higher than that off a leasehold apartment.

Our top tips when purchasing a leasehold property

  • Ensure the lease has more than 90 years remaining
  • Ground rent is reviewed with rate of Retail Price Index
  • Ensure ground rent renewal is reviewed every 5-10 years 

For more information on either freehold or leasehold property please contact our advisory team on 01244 343 355 or email 

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