Understand the differences between leasehold and freehold property in the UK, the advantages of each, and when converting makes financial sense.
When you buy a home in England or Wales, the first legal question is how you will own it: outright (freehold) or for a fixed term (leasehold). The answer affects what you pay each year, how much control you have, how easily you can sell or remortgage, and whether the value of your home erodes over time. This guide sets out the differences, what a short lease does to value, and when it makes sense to convert a leasehold into something longer or freehold.
With freehold you own the building and the land it stands on, with no time limit. With leasehold you own a lease: the right to occupy the property for a fixed number of years, granted by the freeholder (the landlord), who still owns the land and, in a block, the structure. The lease runs down every year you own it, and when it expires the property reverts to the freeholder unless it has been extended.
Most flats in England and Wales are leasehold, because someone has to own and maintain the structure and common parts of a building shared by several households. Most houses are freehold, although a number of new-build houses were sold as leasehold, a practice the Leasehold and Freehold Reform Act 2024 is designed to restrict.
| Freehold | Leasehold | |
|---|---|---|
| What you own | The building and the land, indefinitely | A lease for a fixed term; the freeholder owns the land and usually the structure |
| Ground rent | None | Often payable to the freeholder; many leases since 2022 have a peppercorn (zero) rent |
| Service charge | None for the structure (but see estate charges below) | Payable towards the building, insurance and common parts |
| Alterations | Planning and building regulations; no landlord consent | Landlord consent often needed for structural work or changes |
| Lease length | Not applicable | Shortens every year; affects value and mortgages |
| Selling or remortgaging | Usually simpler | The buyer’s lender will look at lease length, ground rent and service charges |
| Control of the building | You decide | Freeholder or management company decides, unless leaseholders take control |
A freehold house usually has no ground rent, no lease to run down and no landlord to ask for consent to alterations, although planning rules, building regulations and any restrictive covenants still apply. You are responsible for all repairs and insurance yourself. Freehold is not always charge-free: some modern estates have a managing company that charges an estate management fee for shared roads, play areas or landscaping, so check whether the property is on a managed estate.
Freehold flats are rare because covenants for repairs and shared structure do not run with the land to later owners in the way they do under a lease. The alternative to leasehold for flats is commonhold, a form of tenure created in 2002 that has been little used; the government has been working on legislation to make it the default for new flats (see our commonhold guide and the 2026 Bill explainer).
A short lease is worth less because it is a wasting asset, and the freeholder's right to take the flat back approaches. The standard way to measure the effect is relativity: the value of a lease of a given length expressed as a percentage of what the property would be worth with a long lease or freehold. Using the Gerald Eve 2016 table that our calculator uses, a flat worth £300,000 with a long lease would be worth roughly:
| Years left | Relativity | Indicative value |
|---|---|---|
| 90 | 94.8% | about £284,000 |
| 80 | 90.5% | about £271,500 |
| 70 | 84.9% | about £254,800 |
| 60 | 78.2% | about £234,700 |
| 50 | 70.5% | about £211,500 |
These are illustrative figures from a published graph, not predictions for any particular flat: actual sale prices depend on the local market and on evidence from comparable sales, and tribunals prefer such evidence to graphs. They do show why the decline is steep once a lease gets short.
Lenders add a second effect. Mortgage lenders set their own minimum remaining term, and policies vary: many are cautious below about 80 years and some decline short leases entirely, which shrinks the pool of buyers. If your lease is short, the cost of extending is a price you may pay at the point of sale if not before. See the 80-year rule for why the cost jumps at that line.
Since 31 January 2025 you no longer need to have owned your lease for two years before extending or joining a collective claim, so a new buyer can start the process straight away.
Where the flat owners together own the company that holds the building's freehold, they control service charges, insurance and management and can agree longer leases among themselves. It is attractive and often achieved through collective enfranchisement, but it comes with responsibilities and the risk of disputes between neighbours. See share of freehold explained.
Compare leasehold and freehold on the total cost of owning, not only the headline price: a cheaper leasehold flat can cost more over time once ground rent, service charges and an extension are counted. This article is general information, not legal advice.
Freehold means you own the property and the land outright with no time limit. Leasehold means you own a lease: the right to occupy for a fixed term, which shortens each year, while the freeholder owns the land. Leaseholders usually pay ground rent and a service charge, and may need the landlord's consent for some alterations.
Not necessarily. Many flats are leasehold and a long lease with a low or zero ground rent and reasonable service charges can be a sound purchase. The risks are a short lease, high or escalating ground rent, large service charges and building safety issues, so check them before you buy and price in the cost of any extension.
The shorter the lease, the lower the value, and the effect accelerates below about 80 years. On the Gerald Eve 2016 relativity table a 60-year lease is worth about 78% of the long-lease value and a 50-year lease about 70%. Many mortgage lenders also restrict lending on short leases, which limits buyers. Actual prices depend on local evidence.
If you own a house you may have the right to buy the freehold under the Leasehold Reform Act 1967. If you own a flat, leaseholders in the building can buy the freehold together by collective enfranchisement if they meet the qualifying tests, but you cannot normally buy the freehold of a single flat on its own. Alternatively you can extend your lease by 90 years with no ground rent.
The Leasehold and Freehold Reform Act 2024 provides for restrictions on selling new houses as leasehold, but the commencement of the ban has not been confirmed, and the 2026 draft Commonhold and Leasehold Reform Bill proposes further changes. Existing leasehold houses are not affected by a ban on new ones. Check our reform tracker for the current position.
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This guide is researched from official and primary sources. Check them directly before relying on any figure or date.
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