Leasehold vs freehold explained

What does leasehold mean?

You own the right to occupy for the lease term. The freeholder owns the building and land. You pay ground rent (on older leases) and service charges. When the lease expires the property reverts to the freeholder — which is why short leases are a problem. Most flats in England and Wales are leasehold. For free tools that sit alongside titles and leases in later steps, bookmark the resources hub.

What does freehold mean?

You own the property and land outright with no time limit. No ground rent, no service charges to a landlord. Most houses are freehold. Share of freehold is where flat owners collectively own the freehold company — common in conversions.

What is share of freehold?

A share of freehold means you own a share of the company that owns the freehold. You are still a leaseholder but the freeholder is a company you part-own and control. This gives many of the same practical benefits as freehold ownership.

What are the main problems with leasehold?

Short leases reduce property value and make mortgages difficult. Ground rent escalation clauses. Service charge opacity and overcharging. Poor management by freeholder-appointed agents. Lack of control over building decisions.

What options do leaseholders have?

• Right to Manage — the most accessible statutory route for many flats: no need to prove fault, clearer steps than collective purchase, and you can run the block through your own RTM company. With the right tools, self-management after RTM is typically the most cost-effective path to restoring transparency and control without waiting years for negotiation. Start with what is the Right to Manage? and check eligibility; see what an RTM company does once you move past headline concepts.
• Lease extension — lengthen the lease term to protect mortgageability and defer marriage value pitfalls; model numbers with our lease extension calculator.
• Collective enfranchisement— neighbouring qualifying leaseholders can together buy out the landlord's interest; usually more costly and protracted than RTM, but outright freehold acquisition when the group prefers it.
• Right of first refusal — statutory opportunity for leaseholders when the landlord intends to dispose of the building in qualifying circumstances; timelines and conditions are tightly prescribed — professional advice pays off.

How does the Leasehold and Freehold Reform Act 2024 change things?

Two-year ownership rule abolished. RTM costs reduced. Future valuation changes pending secondary legislation. Dig into what is already effective versus still on the roadmap in our overview of the Leasehold and Freehold Reform Act 2024.