Freehold vs. Leasehold: Which Property Type is Best for You 2025?

REAL ESTATE1 month ago

When buying property, one of the biggest questions you’ll face is: Should I choose a freehold or leasehold home? This choice can impact your rights, responsibilities, and the long-term value of your property. It’s important to know the difference before signing any contract.

This article will explain what freehold and leasehold mean, the key differences, and help you decide which option might be better for you.

What is Freehold?

A freehold property means you own the building and the land it sits on outright. There’s no time limit on your ownership—you have it forever, and you don’t need to pay ground rent or ask anyone for permission to make changes (subject to planning rules).

Advantages of Freehold:

Full ownership of land and property.
No ground rent or service charges to pay.
You’re responsible for maintaining everything.

Disadvantages of Freehold:

Higher upfront cost.
You’re fully responsible for repairs and upkeep.

Freehold is common for houses and is generally seen as the preferred option if you can afford it.

What is Leasehold?

A leasehold property means you own the property, but not the land it stands on. You are leasing it from a landlord (also called a freeholder) for a certain number of years—often between 99 and 999 years. When the lease ends, ownership returns to the freeholder unless you extend the lease.

Advantages of Leasehold:

Often cheaper than buying freehold.
Common in flats and apartments.
Shared responsibility for maintenance (in flats).

Disadvantages of Leasehold:

You must pay ground rent, service charges, and possibly other fees.
Need permission for major changes.
Lease extensions can be expensive.
Property value may drop as lease shortens.

Key Differences Between Freehold and Leasehold

Feature	Freehold	Leasehold
Ownership	You own land and building	You own the building only
Time Limit	Unlimited	Limited (99-999 years typical)
Cost	More expensive upfront	Cheaper to buy, but fees apply
Responsibility	Owner handles all maintenance	Shared or landlord-managed
Fees	No ground rent or service charges	Ground rent, service charges
Control	Full control over the property	Limited control; need permissions

Which is Better: Freehold or Leasehold?

There’s no one-size-fits-all answer. The right option depends on your budget, property type, and future plans.

Choose Freehold If:

You want full control and long-term security.
You’re buying a house.
You don’t want to deal with a landlord or extra fees.

Choose Leasehold If:

You’re buying a flat or apartment.
You want a cheaper upfront cost.
You’re okay with limited control and some ongoing fees.

What to Watch Out for in Leasehold Deals

If you’re considering a leasehold property, here are a few things to check:

Length of lease: Anything under 80 years could be hard to sell or mortgage.
Ground rent terms: Check for unreasonable increases.
Service charges: Ask what they cover and how often they change.
Permission fees: You may need to pay to make changes or even to have pets.

Always read the lease agreement carefully and consult a solicitor who understands leaseholds.

Can You Convert Leasehold to Freehold?

Yes, in some cases. In the UK, for example:

Flat owners can buy the freehold together (called “collective enfranchisement”).
House owners often have a legal right to buy the freehold after two years.

It can be complex and costly, but it may increase your property’s value.

Conclusion

Both freehold and leasehold come with pros and cons. Freehold offers more freedom and long-term value, but with higher upfront costs. Leasehold may suit your budget and lifestyle, especially for flats—but be aware of fees and restrictions.

Always do your research and get professional advice before making a decision. The right choice will depend on your personal circumstances and goals.