Leasehold vs freehold: what’s the difference and which is better?
Freehold means you own the land; leasehold means you own the home for a set number of years - with ground rent and service charges. What buyers need to know in 2026.
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Freehold means you own the property and the land it stands on, outright and forever. Leasehold means you own the property for a fixed number of years - often 99 to 999 - while the land belongs to a freeholder, and you pay them ground rent and service charges. Most houses are freehold; most flats are leasehold.
The key differences
| Freehold | Leasehold | |
|---|---|---|
| What you own | The home and the land | The home, for the length of the lease |
| Ground rent | None | Usually - an annual payment to the freeholder |
| Service charges | None | Usually - maintenance of shared areas |
| Control | Full - you maintain your own property | Limited - the freeholder sets the rules |
| Cost over time | Lower | Higher - rent, charges and lease extensions |
The lease-length trap
Leases lose value as they shorten, and the danger point is 80 years: below that, extending becomes expensive, and many lenders refuse mortgages. Before buying a leasehold, always check the remaining term. If it’s under 90 years, budget for a lease extension - and negotiate the price down accordingly.
Ground rent and service charges
Ground rent is the payment to the freeholder for the land - traditionally small ("peppercorn"), but some newer leases have rents that double every few years, which can make a property very hard to sell. Service charges cover shared maintenance: lifts, roofs, communal areas. Ask for three years of service charge history and the current ground rent schedule before offering.
The 2024 reforms
The Leasehold and Freehold Reform Act 2024 is the biggest shake-up in a generation. Key changes: ground rent is banned on most new leases, lease extensions are being made cheaper and simpler (moving towards a 990-year term), and it will become easier for leaseholders to challenge unreasonable service charges. Some provisions are still rolling out - check the current position with your conveyancer, not an article from two years ago.
Which should you choose?
- Houses: overwhelmingly freehold - prefer it unless the price reflects a long, well-managed lease
- Flats: leasehold is the norm and can be excellent value - what matters is a long lease (90+ years), low ground rent and a well-funded management
- New-build leasehold houses: the government has effectively ended this practice - be wary of anything that still tries it
Leasehold isn’t bad; bad lease terms are bad. A flat with 120 years left, peppercorn ground rent and a healthy sinking fund can be a better buy than a freehold house you can’t afford to maintain.
Source: GOV.UK - leasehold property — Rules checked August 2026
Source: GOV.UK - Leasehold and Freehold Reform Act 2024 — Reform programme checked August 2026
Shared ownership explainedShared ownership homes are usually leasehold - know the full picture.The buying process, step by stepWhere the lease checks fit in the buying timeline.
Sources
- GOV.UK - leasehold property - Rules checked August 2026
- GOV.UK - Leasehold and Freehold Reform Act 2024 - Reform programme checked August 2026
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