Leasehold vs Freehold: what are the differences?

• Freehold means owning both the land and building outright. Approximately 81% of properties in the UK are freehold.
• Leasehold means owning the right to occupy a property for a fixed period, paying ground rent and service charges. After the lease ends, ownership reverts to the freeholder unless the lease is extended.
• Once a lease drops below 80 years, extension costs rise sharply due to ‘marriage value’ which can cause leases under 70-80 years to be harder to sell or mortgage.
• Some leasehold properties come with a ‘share of the freehold’, giving joint control over the building and easier, cheaper lease extensions.
• The Leasehold and Freehold Reform Act 2024 should introduce longer lease extensions, abolish marriage value, ban new leasehold houses and remove ground rents. Some of these measures came into force in January 2025.
• Commonhold is an alternative to leasehold, and is where owners jointly manage shared areas without time-limited leases. It is the stated aim of the Government to make Commonhold the default system for new flats in England & Wales.

Freehold means owning both the land and the building on it outright, with no time limit on ownership.

The freehold owner has complete control over the property – including responsibility for maintenance – and does not pay ground rent or service charges to a landlord.

This ownership is perpetual, meaning it lasts indefinitely until the owner decides to sell. The property can be inherited or sold without landlord restrictions.

Freehold properties also tend to allow more freedom to make alterations or renovations, subject to planning permission.

Freehold ownership usually includes ownership of the garden around the property.

Most properties in the UK are freehold, with approximately 81% being freehold properties, according to the latest government statistics on leasehold dwellings.

Leasehold means you own the right to live in a property for a fixed period of time as set out in a lease agreement with the freeholder or landlord.

You do not own the land the property stands on, which remains part of the freeholder’s ownership. During the lease, you have the right to occupy and use the property.

However, you usually must pay ground rent to the freeholder and contribute to service charges for maintenance of communal areas.

Under the Leasehold Reform (Ground Rent) Act 2022, most new residential leasehold property owners do not need to pay ground rent, but this does not apply to existing properties.

Leasehold is common for flats, but some houses can also be leasehold, particularly through shared ownership schemes.

Lease terms often last decades or even centuries, but eventually, ownership of the property reverts to the freeholder unless the lease is extended.

Leaseholders can ask to buy the freehold under ‘collective enfranchisement’ which is a right introduced by the Leasehold Reform, Housing & Urban Development Act 1993. However, where a freehold is split into three or more leaseholds, at least half of all the leaseholders need to agree to buy it as a group.

It has become commonplace to issue new leases for apartments in new buildings with 999 year terms, however this was not always the case. Older properties, for example those built or converted 20-30 years ago, were often issued with leases of 99 or 125 years..

Once a lease enters its final 80 years, the freeholder becomes entitled to half of the increase in the property’s value that results from the extension. This so-called ‘marriage value’ reflects the combined value of the freeholder’s interest and the lease itself, as the Leasehold Advisory Service explains.

A lease with under 80 years left can make the property harder to sell or remortgage and these difficulties become further pronounced as the remaining lease continues to shorten. Prospective buyers may also find it difficult to secure a mortgage from most lenders.

Because the renewal process can be time-consuming, it’s best practice to start planning for a lease extension once the remaining term drops below 90 years.

On our website, leasehold property owners can update the number of years remaining on their lease for a more accurate value estimate. See Fig. 01.

Under the recently passed Leasehold and Freehold Reform Act, the lease extension process may change including the scrapping of ‘marriage value’ – we’ll cover this later in the article.

Some leases come with a share of the freehold. A 'Share of freehold' means you hold your lease on your leasehold property, plus a share in the entity which owns the freehold for the entire building and/or land.

This gives you more control over management and maintenance decisions and usually the ability to extend leases more easily and cheaply.

In short, owning a share of the freehold offers greater control and often lower costs compared to standard leasehold ownership.

Leasehold property owners can also update their entry on our website to indicate if the lease comes with a share of the freehold – see Fig. 02.

A flying freehold is where part of a freehold property physically overhangs or underlies land or buildings that are owned by someone else, rather than sitting entirely on its ‘own’ land.​

Typical examples include:

• A bedroom over a shared alleyway between two houses
• A room above an archway giving access to rear land
• Balconies above a neighbour’s garden
• Cellars or vaults extending beneath a neighbour’s property

Flying freeholds can cause some legal issues – for example, there may be no clear rights of support from the structure underneath, or rights of access to perform maintenance or make repairs.

This can create issues on sale or remortgage. Conveyancers will check the deeds carefully and many lenders want confirmation of adequate rights, or require a title indemnity insurance policy.​

Putting in place a deed of covenant or a similar scheme, or obtaining flying freehold indemnity insurance, are common ways of addressing this issue.

The recently passed Leasehold and Freehold Reform Act 2024 introduces major changes to improve leaseholder rights and simplify the process of lease extensions and freehold purchases. 

However it may take some time to enact all parts of the Act.

The upcoming changes include:

• Lease extensions to allow leaseholders to add 990 years to their lease, up from 90 years for flats and 50 years for houses.
• Abolition of the marriage value payment, removing the additional cost previously applied to leases with under 80 years remaining.
• Removal of the two-year ownership rule, enabling leaseholders to extend leases or buy the freehold immediately after purchase.
• Ban on new leasehold houses being sold (with a few exceptions).
• Lower costs for leaseholders acquiring the freehold or managing the property and new limits on paying freeholder legal costs.
• Removal of ground rent payments.

As of January 2025, the removal of the two year waiting period before extending a lease has been enacted.

The Ministry of Housing, Communities and Local Government recently conducted a consultation entitled Strengthening leaseholder protections over charges and services which concluded on 26 September 2025. The Ministry is now reviewing the responses with a view to introducing regulations to implement further parts of the 2024 Act.

In October 2025, the High Court dismissed a legal challenge to the Act pursued by a group of freeholders.

Commonhold is a relatively new system of property ownership, first introduced via the Commonhold and Leasehold Reform Act 2002. As the system is relatively new, there are currently very few commonhold properties in England and Wales.

Under this model, you own a property outright on a freehold basis, with no time limit on ownership. The common parts of the building or estate – such as shared hallways, gardens, or structural elements – are collectively owned and managed by a commonhold association made up of all property owners.

The government is expected to introduce a draft Leasehold and Commonhold Reform Bill in the coming months. Its aim is to make commonhold the default ownership option instead of leasehold, according to this press release.

If you found this article useful, take a look at our full blog for further analysis. Recently we have covered:

• Buying a House Process: 10 Steps to Buying a House
• How to Add Value to Your Home: What Adds Value to a House?
• Guide Price Meaning and How to Negotiate House Prices
• Questions To Ask When Viewing A House Or Flat
• Searching for the Best Value Property across England & Wales
• When is the Best Time to Sell a House in the UK
• Where Is The Cheapest Place to Buy a House in the UK?

Anyone can access the data for individual properties, including freehold or leasehold details and much more, using the search bar on our website.

Our professional accounts have access to fully interactive and filterable property heatmaps. We also provide advanced tools and bespoke reports for agents.

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