What Is Freehold vs Leasehold?
Freehold means you own the property and land outright. Leasehold means you own the property for a fixed number of years under a lease from the freeholder.
Definition
In England and Wales, property ownership takes one of two forms. Freehold means you own the building and the land it sits on permanently, with no ongoing obligations to a landlord. Leasehold means you own the right to occupy for a set number of years (the lease term). Flats in the UK are almost always leasehold; houses are usually freehold though some are sold leasehold. Key leasehold considerations: ground rent (annual charge to the freeholder), service charge (maintenance of communal areas), and the lease term (short leases under 80 years are harder to mortgage and cost more to extend). Since 2022 new residential leasehold house sales are banned; reforms in 2024 have capped ground rents and simplified lease extensions.
Example
You buy a flat with 85 years on the lease. Ground rent is £200/year. After 5 years the lease has 80 years left. Extending it before it falls below 80 years (where the freeholder gains marriage value) could save thousands.