Freehold vs Leasehold: The Key Differences

The property purchase process can be daunting – there’s so much to consider, from insurance to conveyancing.


Another thing to consider is the land that your property sits on. There are two main options when browsing properties – freehold and leasehold. Roughly 63% of households in the UK own the property – but not everybody knows whether their property is freehold or leasehold – or what they mean.


Thankfully, we’re going to explain it to you. Read on to learn about the differences between freehold and leasehold, and how they can affect your property purchase.

What is Freehold?

If you own the freehold of a property, then you own the land it stands on as well as the property. This means that any upkeep on the property and land will be your responsibility – whether it be the structure of the home, the possessions inside, the roof, and the garden.


The Civil Aviation Act 1982 states that you also own the airspace up to 500 feet of the property. If you have the freehold to a property, you are entitled to change the structure of the property – for example, adding an extension. However, you’ll need to acquire the correct planning permission from your local council.

What is Leasehold?

A leasehold differs from a freehold in the sense that you own the property but do not have ownership over the land that the property falls on. The land that the property is built on is owned by the freeholder – whereas if you have a leasehold, you’re a leaseholder.


You own a lease that allows you to occupy the property – this can be for a set amount of time, whether it be years or centuries.


The length is typically between 90 and 120 years – however, be sure to check out how long the leasehold is before you purchase a property, as if the lease expires, then the ownership of the property will fall onto the person who owns the freehold.


If you’re opting for a leasehold property, you’ll sign a contract with the person who owns the freehold of the property. This will let you know the terms of your leasehold, including any ground rent you may be required to pay and other annual costs such as maintenance and service charges.


You may also be required to acquire permission from the person that owns the freehold if you wish to carry out works to the property such as an extension. You may also be required to ask permission to have a pet on the property.


Typically, leasehold is reserved for flats and apartments – but this isn’t always the case. If you have a leasehold property, you might not be able to sub-let or run a business from home – and conveyancing can be more expensive. Be wary of the restrictions if you plan on purchasing a leasehold property.


When purchasing a property, be sure to check what kind of ownership you’re buying – as some houses are still purchasable with a leasehold instead of a freehold. Since 2019, all new-build homes in the UK have been required to be sold as freeholds.

Freehold vs Leasehold

When buying a property, it’s important that you check whether the property is freehold or leasehold. This will enable you to understand your ownership rights – for example, whether you’ll be able to extend the property or whether you’ll be required to pay maintenance fees.


If you buy a freehold property, you’ll own the freehold until you sell it or pass the property title on to somebody else. However, if you own a leasehold property, you’ll own it until the lease runs out. When the lease runs out, the ownership will revert back to whoever has the freehold.


To avoid confusion during the property purchase process, whether you’re a first-time buyer, you’re buying to let (rent to tenants), or you’re looking for a shared ownership mortgage, we recommend that you find an expert mortgage broker to guide you through the process.


At LTC Mortgages, we can streamline the property buying process for you, explaining the nuances of property ownership in an understandable manner – whether it be regarding insurance, tax, or financial aspects – or you simply need advice.

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