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    By Rhys Hedges · Published 4 November 2026

    Leasehold vs Freehold: What You Own, What You Pay

    Buyer comparing a house and a block of flats

    With freehold you own the property and the land it stands on outright. With leasehold you own the right to live in the property for a fixed number of years, but not the land, and you usually pay ground rent and a service charge to keep it running. Most houses are freehold and most flats are leasehold, but there are exceptions in both directions, so always check the tenure before you offer.

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    Key points

    • Freehold means you own the building and the land. You arrange and pay for maintenance and insurance yourself, and there is no ground rent.
    • Leasehold means you own a lease for a set term, often 99 or 125 years. You usually pay ground rent and a service charge, and the lease sets rules you must follow.
    • Lease length matters. A short lease cuts the value of a flat, narrows the pool of buyers and can make a mortgage harder to get.
    • Share of freehold is leasehold with a stake in the building’s freehold, which usually means no ground rent and more control.
    • Reform is under way in England and Wales, including a planned £250 ground rent cap on existing leases. Scotland is different.

    Table of Contents

    What is the difference between leasehold and freehold?

    The Law Society explains that a freehold owner of a house usually owns the property and the land it sits on, arranges and pays for their own maintenance, insures the building and contents, and pays no ground rent. A leasehold owner does not own the land. If the property is a flat, they do not own the structure of the building or the shared parts either. The first buyer is granted a lease to occupy the flat for a set number of years, often 99 or 125.

    GOV.UK puts it the same way: freehold means you own a property and the land it occupies, while leasehold means you own the right to occupy it for a fixed period, typically 99 years or more. Houses can be freehold or leasehold, while flats are generally leasehold. The government’s leasehold toolkit says around 5 million homes in England and Wales are leasehold, primarily flats.

    Freehold and leasehold ownership compared

    In plain terms, with a leasehold flat you are buying a long tenancy, and someone else, the freeholder, owns the ground under it and usually controls how the building is run.

    Side by side

    Freehold Leasehold
    What you own Building and land A lease for a fixed term, not the land
    Typical property Houses Flats, and some houses
    Ground rent None Often payable on older leases
    Maintenance You arrange and pay Shared through the service charge
    Building insurance You arrange Usually arranged by the landlord, with the cost passed on
    Alterations Planning permission and building control where needed Often need the landlord’s consent
    Value over time Does not run down Falls as the lease gets shorter

    What does freehold ownership involve day to day?

    Freehold gives you the most control, but the responsibility is all yours. You organise repairs, insure the building and its contents, and pay for both. If you share services such as a private drive or drains with neighbours, maintenance charges may still apply, but there is no landlord setting them.

    You can alter the property provided you have any planning permission you need and meet building control requirements. If you are weighing up an extension, it helps to know what a house extension can add in value before you commit to a budget.

    For a freehold house, your budget needs to cover the running costs a leaseholder would partly pay through a service charge. Our guide to house running costs in the UK shows what to allow for.

    What does leasehold ownership involve?

    A leaseholder usually pays ground rent, follows the restrictions in the lease, insures their own contents and contributes to maintaining and insuring the building through the service charge. The Law Society notes that leaseholders may face restrictions on running a business, keeping a pet or making structural alterations.

    The lease is a legal contract. Read it properly, or have your conveyancer explain it, before you exchange. Pay particular attention to:

    • the number of years left on the lease
    • the current ground rent and whether it can increase
    • the service charge for the last few years, and any planned major works
    • restrictions on pets, subletting, flooring and alterations
    • who the freeholder is and who manages the building

    Our separate guide to leasehold costs, including ground rent, service charges and lease extension goes into the figures in more detail.

    What is ground rent and who has to pay it?

    Ground rent is a payment to your landlord that may be written into your lease. The landlord does not have to provide any service in return. The rules depend on when your lease was granted, according to the Leasehold Advisory Service:

    • Granted before 30 June 2022: you usually need to pay ground rent.
    • Granted on or after 30 June 2022 (or 1 April 2023 for new retirement leases): you do not usually pay, because ground rent is limited to a nominal or zero-value peppercorn.

    A peppercorn ground rent has a value of zero, so you pay nothing, though it still forms a legally binding contract with your landlord.

    On older leases, GOV.UK says you do not have to pay until your landlord sends a formal written demand. Unpaid ground rent can be recovered going back six years, and the landlord can only increase it if you agree or the lease says it can happen.

    Why escalating ground rents worry buyers

    The Law Society says ground rents were often fixed and under £100 a year, but some developers and freeholders set much higher or escalating rents that rise as the lease specifies. Leases with these terms can be very expensive and difficult to sell. If you are looking at a flat, find out whether the ground rent is fixed, and how and when it rises, before you make an offer.

    How is a service charge different from ground rent?

    The two are often confused, but they pay for different things.

    Ground rent Service charge
    What it is A payment to the landlord under the lease Your share of the cost of maintaining and insuring the building
    Return for the money None required Repairs, buildings insurance, cleaning and management of shared areas
    Varies with The lease terms Actual costs of running the building
    Newer leases Peppercorn, so nothing to pay Still payable

    Even a peppercorn lease carries a service charge, and so does a share of freehold. That is why a flat with no ground rent can still be expensive to own. When you compare two flats, ask for the last three years of service charge accounts, not just the current figure, and check whether a major works programme is planned.

    What does share of freehold mean?

    Share of freehold usually applies to flats. You own your flat on a lease and you also jointly own the freehold of the building and land. The HomeOwners Alliance explains that you and your neighbours then have more control over how the building is managed and insured and how service charges are spent, but the lease stays legally binding.

    There are two usual set-ups:

    1. The freehold is owned jointly by up to four flat owners in their own names.
    2. A freehold management company is set up to handle insurance, maintenance and accounts. Each flat owner is a member or shareholder, and the company must keep up-to-date records at Companies House.

    Co-owners usually pay no ground rent, but you still pay towards maintenance and block insurance through the service charge. If a managing agent is appointed, they can arrange the insurance for you. Because the owners are also the landlord, one neighbour not paying or disagreeing about works becomes everyone’s problem, so ask how well the building is run.

    How can you check if a property is leasehold or freehold?

    The seller, estate agent or developer must tell you if a property is leasehold. Listings on Rightmove and Zoopla normally show the tenure, and the lease length for leasehold homes. Once you decide to buy, GOV.UK says your conveyancer should send you a copy of the lease and details of current service charges. You can also get a copy of the lease from HM Land Registry for a small fee.

    A quick routine before you offer:

    1. Check the tenure on the listing and ask the agent to confirm it.
    2. Ask for the remaining lease length, the ground rent and the latest service charge.
    3. Ask whether the freehold is owned by a third party, or is a share of freehold.
    4. Raise any concerns with your conveyancer before exchange.

    Our house viewing checklist includes the questions worth putting to the agent at the viewing.

    Why does the length of a lease matter?

    The Law Society points out that each time a leasehold property is sold, the lease passes to the new buyer, so the length reduces and the value of the home falls as the lease gets shorter. When a lease reaches zero, GOV.UK says the landlord may take possession, and that you should extend before the lease has only 80 years remaining.

    The 80-year mark matters because of marriage value. One leasehold adviser says marriage value can become payable when 80 years or less remain when the formal notice is served, which significantly increases the premium. It also says many lenders are cautious about shorter leases, and that fewer than around 70 years can make a flat harder to mortgage and sell. The Leasehold and Freehold Reform Act 2024 is intended to remove the marriage value requirement, but as the rules are still being phased in, take advice from a leasehold solicitor if your lease is at or under 80 years.

    For a buyer, this has a practical effect on price. A flat with a short lease should be priced below a similar one with a long lease, because you may have to pay to extend it. Comparing sold prices for flats with similar lease lengths in the same building is a fair way to judge what you should offer.

    Why does the length of a lease matter?

    Is a 999-year lease as good as freehold?

    For most practical purposes, a very long lease behaves much like freehold, because there is no realistic prospect of the term running down and lenders have no concern about its length. You still pay a service charge, you may still pay ground rent, and the lease restrictions still apply, so read it just as carefully.

    What is changing with leasehold reform in 2026?

    The changes apply to England and Wales. The House of Commons Library records that the Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024. It makes it cheaper and easier to extend a lease or buy the freehold, including by removing marriage value and setting a standard 990-year extension at a peppercorn ground rent. It also bans most new leasehold houses.

    Some rules are already in force:

    • The two-year ownership wait before extending a lease or buying the freehold was removed on 31 January 2025.
    • Regulations on right to manage came into force on 3 March 2025.
    • Peppercorn ground rents on new long leases have applied since 30 June 2022.

    The next stage is a Commonhold and Leasehold Reform Bill. The Leasehold Advisory Service reports that the King’s Speech confirmed measures expected in it, including a £250 cap on existing ground rents falling to a peppercorn after 40 years, ending forfeiture for long residential leases, easier conversion to commonhold and a ban on leasehold for most new flats. The government’s impact assessment says the cap applies to older long residential leases, with limited exemptions, and that implementation is expected in 2028.

    The draft Bill was published on 27 January 2026, and one law firm’s summary notes it would replace long residential leasehold with commonhold for flats, with forfeiture replaced by a statutory enforcement scheme. Because the Bill was still going through Parliament when we last checked, treat these as proposals and look at GOV.UK for the current position before you rely on any of them in a purchase.

    What about Scotland?

    None of these leasehold changes apply in Scotland. The same law firm explains that long residential leasehold is not widely used there and residential leases are capped at 20 years. If you are buying in Scotland, the leasehold versus freehold question mostly does not arise in the same form.

    Is leasehold bad?

    Not by definition. Many leasehold flats are well run, with long leases, low or nil ground rent and a fair service charge. The problems usually come from specific terms: a short lease, ground rent that escalates, a service charge that keeps rising, or a landlord who manages the building poorly. Those are things you can check before you offer, and they are exactly what the reform programme is aimed at.

    A sensible buyer treats leasehold as a set of terms to be priced, not a yes or no question. A long lease, nil ground rent and clear service charge accounts are a different proposition from a 75-year lease with a rising ground rent.

    Which should you choose?

    The choice is often made for you. Most flats are leasehold, and most houses are freehold. Where you have a choice, these points tend to decide it:

    • You want full control and no landlord: freehold, usually a house.
    • You want a lower-maintenance home and shared upkeep: a leasehold flat can suit you, if the lease is long and the charges are clear.
    • You want more say in the building: look for share of freehold.
    • You are buying with a mortgage: check the lender’s minimum lease length, and avoid leases heading towards 80 years unless the price reflects it.

    If you are buying as an investor or landlord, include the ground rent and service charge when you work out your yield, since both come off your income.

    Check the numbers before you make an offer

    Once you know a property’s tenure, the question is what to offer. Offer Smart is a data-led guide to what you should offer, not a RICS valuation, survey or financial advice. Paste in a Rightmove or OnTheMarket link, or enter an address, and the report compares recent local sales, including homes on the same road, and adds area data such as flood risk, crime risk and nearby schools, plus estimated running costs.

    The full buyer report costs £19.99 one-off. If you are viewing several homes, the Unlimited Homebuyer Membership is £39.99 per month. You can look at an example buyer report first to see what you would get.

    Offer Smart

    For a wider look at pricing, our guide on how to tell if a house is overpriced sets out seven checks you can run yourself.

    Our view on tenure and price

    We see the same pattern with buyers again and again: two homes that look alike on a listing can be priced very differently once tenure is taken into account. A flat with 125 years left, nil ground rent and a modest service charge is a different purchase from one with 78 years, a rising ground rent and major works on the horizon, even if the asking prices are close.

    That is why we built our reports around comparable evidence. Looking at recent sales on the same road, and at the area around it, gives you a grounded view of what you should realistically offer, and gives you negotiation leverage when the lease is the weak point.

    Our reports are a guide, not a valuation or legal advice. Your conveyancer reads the lease; we help you decide what the home is worth to you before you commit.

    Rhys Hedges

    FAQ

    Can a freeholder evict a leaseholder?

    Not simply because they want to. A landlord’s right to end a long lease, called forfeiture, only arises if the leaseholder breaches the lease, and strict procedures apply. The draft Commonhold and Leasehold Reform Bill proposes to replace forfeiture for long residential leases with a statutory enforcement scheme, so check the current position on GOV.UK if this affects you.

    What does peppercorn ground rent mean?

    A peppercorn ground rent has a value of zero, so you pay nothing. It is the standard for most new long leases granted on or after 30 June 2022. It still forms a legal contract with your landlord, and a service charge remains payable.

    Can I turn a leasehold home into freehold?

    In many cases leaseholders can buy the freehold or extend the lease through a statutory process, and the 2024 Act is making this cheaper and easier in England and Wales. The right depends on your property, so ask a leasehold specialist solicitor before serving any notice. If your lease is close to 80 years, take advice promptly.

    Is the average service charge a fixed figure?

    No. Service charges depend on the building, its age, the services it has and what major works are due. The sensible comparison is the actual accounts for the specific building over several years, which your conveyancer can request from the landlord or managing agent.

    Sources

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