Leasehold vs freehold: what you actually own

When you buy a property in the UK, you need to understand one fundamental choice: are you buying it freehold or leasehold? The answer affects what you actually own, what you'll pay each month, whether you can get a mortgage, and how easy it will be to sell. For most flats, the answer is leasehold – and that comes with costs and complexities that surprise many first-time buyers.

Freehold: you own it all

Freehold ownership means you own both the building and the land it stands on, including any gardens or outdoor spaces. There is no lease term and no landlord. You own it outright for as long as you keep the property – there's no expiry date. Most houses in England and Wales are sold freehold, which is why many first-time buyers see this as the simplest and most secure option.

As a freeholder, you are fully responsible for all maintenance, repairs, and upkeep of the building and land. You won't pay ground rent or service charges to anyone else. You can make alterations and extensions to your property, subject only to planning permission from the local authority – you don't need permission from a landlord. This freedom is one of the main advantages of freehold ownership.

Leasehold: renting the building for a set term

Leasehold ownership means you own the right to live in the property for a fixed number of years, as set out in a lease agreement. The land itself remains owned by someone else – the freeholder (sometimes called the landlord). You buy the right to occupy and use the building for the lease term only. When the lease expires, ownership reverts to the freeholder unless you have extended it.

Leasehold is very common for flats and apartments across the UK, though some houses are also sold this way. When you buy a leasehold flat, you're not buying a stake in a building you'll own forever – you're buying a contract that allows you to live there until the lease runs out.

Typical lease lengths

Leases usually last between 90 and 999 years. When a lease is first granted, it might be 99, 125, or 250 years. But here's the crucial detail: the lease term counts down from the day it was granted, not from when you buy the property. A flat granted on a 125-year lease in 1980 has roughly 79 years remaining in 2024, even if you only just bought it. Every year that passes, the number of years left decreases by one.

The critical lease-length thresholds

The number of years remaining on a lease is one of the most important figures attached to your property. It affects how easy the flat is to sell, whether mortgage lenders will lend on it, and how much it will cost to extend the lease. Mortgage lenders have strict rules about minimum lease length, and these rules create several critical thresholds that can dramatically affect your property's value and your ability to finance it.

80 years and above

At 80 years and above, your lease is considered safe by most lenders. Most mainstream UK lenders require at least 85 years remaining on the lease at the start of a mortgage, and many accept leases of 70–85 years depending on the mortgage term. A typical 25-year mortgage on a flat with 65 to 70 years remaining is usually acceptable, because the lender expects some years to remain after you've finished paying the mortgage.

Below 80 years: marriage value kicks in

Below 80 years, everything changes. Once a lease falls below 80 years, you trigger a legal mechanism called "marriage value." This is the financial gain created simply by extending the lease – the difference between what the flat is worth with a short lease and what it's worth with a longer one. Under current law, when a lease is at or below 80 years, the freeholder is entitled to 50 percent of this marriage value uplift, and that amount gets added to what you pay for the lease extension. A lease at 81 years might cost £15,000 to extend, but at 79 years it could cost £25,000 or more – a five-figure difference for a single year.

Lenders become very cautious below 80 years and may refuse to lend or require you to extend the lease as a condition of getting a mortgage. Many will either pull back significantly or pass you to specialist short-lease lenders who charge higher rates. This threshold is so important that professionals and buyers watch the 80-year mark closely and typically try to extend before crossing it.

Below 70 years

Below 70 years, mainstream lenders largely step back. Most mortgage lenders will not lend on properties with fewer than 70 years remaining, and those who do are specialist short-lease lenders charging premium rates. At this point, you face real difficulty getting finance, and buyers on the open market become much fewer. Your property's value drops noticeably.

Below 60 years

Below 60 years, properties become virtually unmortgageable and unsellable on the open market. Very few lenders will touch them at all, and most flats at this level end up selling to cash buyers at a deep discount. If you own a flat with a lease this short and haven't extended it, you need specialist legal advice urgently.

How to check your lease length

The most reliable source for the exact years remaining is the title register held at HM Land Registry. You can request a copy of your leasehold title from gov.uk. If you have your original purchase documents, they should contain your lease agreement and the lease start date. To calculate the years remaining, simply subtract the number of years that have passed since the lease was granted from the original lease term.

Many online tools exist that pull publicly available information from the Land Registry and perform the calculation automatically for you – often free of charge. Your freeholder or managing agent should also have up-to-date lease records and can confirm the remaining term. If you're buying a property, your conveyancer (solicitor) will check this for you and flag any concerns.

Ground rent: the landlord's slice

Ground rent is a regular annual payment you make to the freeholder. It is simply a fee for the land your property occupies – not for any services or maintenance. It's separate from service charges and is set out in your lease agreement.

For older leases, ground rent is typically a fixed amount between £200 and £500 per year, though some properties charge less and others considerably more. However, many leases include rent review clauses that allow the freeholder to increase the ground rent on certain anniversaries – for example, every 10 or 25 years. Some historic leases have escalating rent clauses that doubled the ground rent at regular intervals, which historically made properties very hard to sell and finance.

Ground rent reform for new leases

In response to concerns about spiraling ground rents, the UK government introduced reforms. The Leasehold Reform (Ground Rent) Act 2022 banned ground rents for anyone buying new homes on long leases (over 21 years) granted after 30 June 2022. New-build leases must have a peppercorn ground rent – a legal term for zero or a nominal fee. This protection does not apply to existing leaseholders. If you own a property on a lease granted before the cut-off, you will continue to pay the ground rent stated in your original lease unless you extend the lease or buy the freehold.

The Leasehold and Freehold Reform Act 2024 goes further. It proposes to cap existing ground rents at £250 per year, reducing to a peppercorn (zero) after 40 years. However, these changes are still being phased in and not yet fully in force. When they do take effect, they will limit (but not eliminate) ongoing ground rent costs for older leases.

Service charges: the building upkeep bill

Service charges are separate from ground rent. They are fees you pay to the freeholder (or managing agent) to cover the costs of maintaining and managing the building and its communal areas. Unlike ground rent, which benefits the freeholder as the landowner, service charges are meant to cover actual costs – and these can vary significantly from year to year.

What's typically included

• Building insurance (a compulsory cost)
• Maintenance and repairs to the structure, roof, walls, and common areas
• Cleaning of shared hallways, lobbies, and external areas
• Lift servicing and repairs
• Security, concierge, or caretaker services (if provided)
• Utilities for communal areas (lighting, water, electricity)
• A sinking fund or reserve fund – regular contributions towards major future works like roof replacement or external repainting

Service charges are highly variable. For a small block of 6–12 flats with no lift, you might expect £1,200–£2,000 per year. For a medium apartment block of 20–50 units with a lift, charges typically range from £2,000–£3,500 per year. Larger or more complex buildings, or those in expensive areas like London, can demand much higher service charges. Some buildings have very high charges due to expensive insurance, significant structural issues, or extensive staffing.

Your rights regarding service charges

Leaseholders have legal protections regarding service charges. Freeholders must provide you with a clear breakdown of charges. If a managing agent wants to carry out major works costing more than £250 per leaseholder, or enter into service contracts costing more than £100 per leaseholder per year, they must consult leaseholders first – known as a Section 20 consultation. If they fail to consult properly, they cannot charge you above the consultation threshold.

If you believe service charges are unreasonable or the work is of poor quality, you can challenge them by applying to the First-tier Tribunal (Property Chamber). In some cases, leaseholders can collectively take over the management of the building by forming a Right to Manage (RTM) company, though this typically requires at least two-thirds of the flats to participate.

Leasehold reform: what's changing

The government has introduced significant leasehold reforms via the Leasehold and Freehold Reform Act 2024 and is proposing further changes. These reforms are designed to make leasehold ownership fairer and cheaper, especially for those with short leases or high costs. However, implementation is gradual, and some provisions are not yet in force, so it's important to understand what applies now and what is coming.

Removal of marriage value

The most significant change for buyers of short leases is the abolition of marriage value. The Leasehold and Freehold Reform Act 2024 will eliminate the 50 percent marriage value uplift that applies when a lease is at or below 80 years. This means that extending a lease at 79 years will cost much less in future than it does today. However, this provision has not yet fully come into force. Government announcements suggest implementation is expected late in 2026 or beyond, pending secondary legislation and technical fixes. Until the law changes, the 80-year threshold and marriage value remain in full effect.

Easier and faster lease extensions

As of January 2025, the two-year ownership requirement to extend a lease was abolished. You can now exercise your right to extend a leasehold property or buy the freehold immediately upon purchase, without having to wait two years. This makes it possible to extend quickly if you buy a property with a short lease. The standard extension term will increase to 990 years, with ground rent reduced to a peppercorn.

Ground rent caps on existing leases

The reforms propose to cap existing ground rents at £250 per year, reducing to a peppercorn after 40 years. Again, this is not yet fully in force and is still being phased in. Even when it takes effect, this is a cap – it won't reduce anyone's current ground rent below what they already pay, but it will prevent future increases above £250.

New buildings to be sold freehold by default

Going forward, the government plans to ban the sale of new leasehold houses (with limited exceptions) and is proposing to make commonhold – a form of collective freehold ownership – the standard for new flats. This means future buyers will be far less likely to encounter the problems that plague current leasehold buyers. However, these changes do not help you if you're buying an existing leasehold property today.

Practical checklist before you buy

If you're considering buying a leasehold property, use this checklist to make sure you understand what you're buying and what it will cost:

1. Check the exact number of years remaining on the lease via the Land Registry – this is the starting point for everything else
2. If the lease is below 80 years, seek specialist leasehold advice and understand the cost of extending it before you commit
3. Request the service charge accounts for the last three years and get an itemised breakdown of what the charges cover
4. Ask whether there are any planned major works or significant maintenance issues that could lead to higher service charges soon
5. Check the ground rent amount and whether it increases with rent review clauses – request a copy of the relevant lease clause
6. Ask your mortgage lender whether they will lend on the specific lease length, or whether extension is a condition of the mortgage
7. Check whether the freeholder or managing agent has a good track record and reasonable reputation with other leaseholders
8. Budget for both ground rent and service charges as ongoing annual costs, in addition to your mortgage

Should you buy leasehold?

Leasehold properties are often cheaper to buy than equivalent freehold properties, particularly in city centres and areas where flats are common. If you understand the lease length, the ground rent is reasonable, the service charges are moderate and stable, and the lease is well above 80 years, then buying leasehold can be a sensible choice. Many people live comfortably in leasehold flats for decades.

However, if you're buying a leasehold property with a lease under 80 years, or with significant ground rent increases, or with unusually high or rising service charges, then the financial picture changes. These factors make the property harder to sell, harder to finance, and more expensive to own. In those cases, you need specialist advice and a clear understanding of the long-term cost before you proceed.