Published 21 Oct 2019

What is the Difference Between Leasehold and Freehold?

What is a Leasehold?

A leasehold makes you the owner of your property for the duration specified on your lease. When you buy a flat, you also become the owner of the lease on that flat; making you the leaseholder. Although, leases in the UK are usually issued for 125 years, if you're buying a property on the resale market your lease might be shorter. 
 
What is a 'short' lease?

If a lease has less than 80 years left, it is considered 'short' and might affect the value of your property and your ability to sell it. You may also have problems remortgaging a property with a short lease. As a leaseholder you have a legal right to extend your lease, although lease extensions become much pricier to buy the lower the years remaining on your lease. The standard length for a new lease in the UK is 125 years, but your lease might be considerably shorter if you've bought a second-hand property. 

If you are a leaseholder, your landlord - the freeholder - owns your lease. If you are unsure who the registered freeholder of your property is, you can check that by contacting the Land Registry.
 
Why are flats sold as leasehold?

Freehold includes the land that the property stands on. This is why apartments are usually sold as a leasehold. If you own one flat in a development that consists of six flats, you do not own the land that the flats are built on, this is why the apartments and leaves the responsibility for the upkeep of the whole building and the land it stands on to the freeholder.

What is a freehold?

If you are a freeholder you own your property and the land it stands on indefinitely. You don't have to pay annual ground rent and you can sell leases to people who want to occupy the property you own. This will make them leaseholders and you their landlord. You will be solely responsible for the maintenance of your property.

The freeholder is also entitled to make alterations to the property within legal and planning restrictions.

In the UK, houses are usually sold as a freehold while flats are normally sold as a leasehold.

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