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Buying a home

Freehold vs leasehold property meaning

Freehold and leasehold are different types of tenure or property ownership in the UK. Freehold owners own the property and the land, while leasehold owners don’t own the land, just the property.

NatWest mortgages are available to over 18s. Your property may be repossessed if you do not keep up repayments on your mortgage. The content on this page is guidance only and does not constitute advice.

What are the key differences between freehold and leasehold?

When you’re looking to buy a new home, you’ll be told whether the purchase is freehold or leasehold – and there are key differences between the two. These include:

  • Type of property. While a freehold typically refers to a house, a leasehold property is usually an apartment or a flat.
  • Ongoing costs. Freehold properties usually don’t come with any service or rental charges, but some may have estate charges. Leaseholders typically pay ground rent and service charges annually.
  • Ownership. With a freehold purchase, you own the land and the property outright, whereas a leaseholder will own the property for a set amount of time, after which the property is owned by the freeholder/landlord.
  • Property control. Subject to planning permissions, freeholders have greater control (subject to planning and covenants) over alterations and maintenance. A leaseholder will need permission for alterations, maintenance and renovations.
  • Responsibilities. A freeholder is responsible for all property management, whereas a leaseholder typically has communal areas managed by third parties.

Whether you’re a first time buyer or moving home, it’s important to be aware of these differences.

Freehold and leasehold responsibilities

When purchasing a property in the UK, there are two types of ownership; leasehold and freehold. There are various differences between freehold and leasehold.

What is freehold?

You own the property and land outright.

If you live in the property yourself, you'll be responsible for its upkeep:

  • Maintenance for structural aspects of the building.
  • Upkeep of any communal areas.
  • Managing pest control if necessary.
  • Managing utility supplies (power, etc.) of any communal areas.
  • Depending on the context, you may need provision for insurance of the building.
  • Collecting any fees agreed with leaseholders (ground rent, service charges).
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What is leasehold?

You own the property for a set period, but not the land it's built on.

Your responsibilities as a leaseholder will be outlined in your lease agreement. They may include (but not be limited to):

  • Your responsibilities for the upkeep of the property.
  • Any costs you'll need to pay the freeholder, such as ground rent and service charge.
  • Any specific rules, such as no pets or the inability to rent out the property.
  • There may be terms that don’t allow structural changes, such as extensions.
  • You'll be responsible for insuring the contents of your property (if you choose to).
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What is a lease?

  • A lease is a legally binding contract where an owner allows someone to use an asset for a specified period.
  • In relation to a leasehold, a lease will specify the years remaining on the lease and detail the rights and responsibilities of the person living at the property.
  • A leaseholder may pay ground rent every year to the freeholder (landlord).
  • The terms of a lease will state the current ground rent rate and whether it will rise over time.
  • Many lenders will require a minimum lease period for a mortgage.
  • When a lease ends, ownership reverts to the freeholder.

Leasehold vs freehold: Pros and cons

Leasehold benefits

  • More affordable. Leasehold properties often come with a lower initial price.
  • Fewer responsibilities. Building repairs and building insurance are typically the responsibility of the freeholder. And a third party generally takes care of maintenance.
  • Leasehold amenities. You may find additional amenities in leasehold blocks – including extra security, shared spaces and gardens, and gyms or fitness facilities.
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Leasehold considerations

  • Ground rent and charges. In addition to your mortgage payments, leasehold properties often come with extra service charges and ground rent – these charges can see costs mount over time.
  • Sale and remortgage challenges. It can be hard to sell or remortgage a leasehold if the lease has less than 80 years left.
  • Living restrictions. Depending on the freeholder, there may be restrictions, including not allowing home improvements, pets or managing a business from the property.
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Freehold benefits

  • Full control. Full ownership of the property and land means that, with the correct permissions from the relevant authorities, you can undertake home improvements.
  • No living restrictions. With the relevant permissions as a freeholder, it’s possible to keep pets and run a business from your property.
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Freehold considerations

  • Cost responsibilities. As a freeholder, you’re responsible for all home maintenance, repair and upgrade costs, plus the building’s insurance premium.
  • Up front price. The purchase price of a freehold property is usually higher than that of a leasehold.
  • Restricted property type options. Freehold properties are typically houses, so if you’re looking for other property types, your options may be limited.
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Lease terms and extensions – key things to consider

  • Many leases are typically 99 or 125 years; however, some can go up to 999 years.
  • The term decreases with each year, and when it expires, the property rights are usually returned to the landlord.
  • Due to the decreasing term, the value of the property will also decrease the closer to its term expiration.
  • After owning for two years, you may be legally allowed to apply for an extension.
  • Typically, leaseholders can extend leases for 90 years.
  • The cost of extending a term can be high if there are fewer than 80 years left on a lease.

What are the costs involved with leasehold properties?

  1. Ground rent

    This is a fee a leaseholder has historically paid to the freeholder or landlord to be able to occupy the land on which the leasehold property is built. It’s usually a fixed sum annually. There was a proposed £250 annual cap announced on ground rent in January 2026.

    Leasehold Reform (Ground Rent) Act 2022    : Since the Leasehold Reform Act 2022, most new leases come with zero ground rent, but many existing leases still have it.

  2. Service charges

    You may have to pay an annual amount as a service charge. This is usually used to help with the upkeep of communal areas or building insurance. The lease should feature the responsibilities of the landlord and the leaseholder.

  3. Sinking fund

    The freeholder may also require leaseholders to pay money into a ‘sinking fund’, also known as a 'float'. This is used to cover the cost of major or unexpected works, such as roof repairs. The amount of these contributions may be set out in the lease. Even if they aren’t, they should be deemed ‘reasonable’ in the eyes of the law.
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Can I find out my property’s tenure?

There are various ways to find out your property’s tenure, including:

  • Property form. When you buy, the ‘seller’s property information form’ should tell you the tenure of the property.
  • HM Land Registry Search. You’ll be able to find the tenure type using the GOV.UK service, or the Registers of Scotland service, if you’re based in Scotland.
  • Title register. It’s possible to purchase a copy of a title register from the HM Land Registry section of the GOV.UK website.
  • Land Registry MapSearch. If a property is registered, you will also be able to use this tool to discover its tenure.

When should I renew my lease?

It may be sensible to seek a lease renewal when there’s around 80 years remaining.

A lease can be hundreds of years, so a relatively low remaining term could be an issue if you are selling or remortgaging a property. Mortgage lenders may be less likely to lend on the basis as a remaining lease becomes shorter.

What if I'm buying a leasehold property?

If you're buying a leasehold, you're effectively purchasing an existing lease agreement, rather than starting a new lease with the freeholder.

If the property has a relatively short lease term remaining, this will likely be reflected in the asking price.

If you're interested in buying a leasehold property, you should always seek a copy of the lease agreement, confirming the remaining lease term. Your conveyancer will help you with this.

Freehold vs leasehold FAQs

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Written by: Mortgages Team
Reviewed by: Financial Promotions Approvals team
Last updated on: 12/06/2026