Freehold vs Leasehold: Understanding the Difference in Conveyancing

Freehold vs Leasehold: Understanding the Difference in Conveyancing

When purchasing a property, one of the key considerations is whether it is freehold or leasehold. This distinction affects your rights as an owner, your responsibilities, and potential costs. Below is a breakdown of the key differences.

Freehold

A freehold property means you own both the building and the land it stands on outright, indefinitely.

Key Features:

You are the absolute owner of the property and the land.

There is no time limit on your ownership.

You are fully responsible for the maintenance and upkeep.

There are no ground rent or service charges to pay to a landlord.

Common for houses, but rare for flats.

Pros of Freehold:

✔ Full ownership and control. ✔ No landlord or lease restrictions. ✔ No annual lease-related payments. ✔ Generally more valuable and easier to sell.

Cons of Freehold:

✖ Full responsibility for repairs and maintenance. ✖ Initial purchase price may be higher.

Leasehold

A leasehold property means you own the property for a set period, but not the land it stands on. Instead, the land is owned by a freeholder (landlord), and you lease the property from them.

Key Features:

Ownership is for a fixed term (e.g., 99, 125, or 999 years).

You may have to pay ground rent, service charges, and maintenance fees.

The lease typically includes restrictions (e.g., no pets, no structural changes without permission).

If the lease term runs low (e.g., below 80 years), it may reduce the property’s value and be expensive to extend.

Common for flats and apartments, though some houses are also leasehold.

Pros of Leasehold:

✔ Typically lower purchase price compared to freehold. ✔ Maintenance and communal area management handled by the freeholder or management company. ✔ Ideal for flats where shared services (e.g., lifts, gardens) need maintenance.

Cons of Leasehold:

✖ Additional costs such as ground rent and service charges. ✖ Lease extensions can be costly and complex. ✖ Potential restrictions on property use and alterations. ✖ If the freeholder is uncooperative, issues may arise with maintenance and lease extensions.

Key Considerations When Buying Leasehold

Lease Length: Ensure the remaining term is long enough (ideally above 90 years).

Ground Rent & Service Charges: Check how much you will need to pay and whether they could increase.

Lease Restrictions: Understand what you can and cannot do with the property.

Right to Extend: Check if you have the legal right to extend the lease or purchase the freehold.

Which is Better?

If you want complete control and long-term security, freehold is preferable.

If you prefer a lower-cost option with less maintenance responsibility, leasehold may be suitable—especially for flats.

Always review the lease details carefully and seek legal advice before committing to a leasehold purchase.

For further guidance, consult a conveyancing solicitor to ensure you fully understand your rights and obligations before purchasing a property.

Contact us for more information:

Offices in Redditch and Bromsgrove

Tel: 01527 892949