Freehold
You own the property and the land it stands on, outright, forever. Most houses in England, Wales and NI are freehold. You are responsible for everything, and nobody sends you a service charge.
Leasehold
You own the home for the length of the lease (say 125 or 999 years from when it was granted), and the freeholder owns the building or land. You pay:
- Ground rent: new leases must be a peppercorn (zero). Older leases can have real ground rents; if it doubles every 10 or 15 years, lenders may refuse. Check.
- Service charge: your share of maintaining the building: insurance, lifts, cleaning, repairs. Can be a few hundred to several thousand pounds a year. Ask for the last three years' accounts and any planned major works.
The lease length rule
Lenders want a good number of years left at the end of the mortgage term, often 70 or more, and value drops sharply once a lease falls under about 80 years, because extending gets expensive. Under 80 years: get a quote for extension before you offer. Reforms are making extensions cheaper and longer (990 years) but the numbers still matter.
Questions to ask on any flat
- How many years are left on the lease?
- What is the ground rent, and does it increase?
- What is the service charge, and what has it been for three years?
- Any major works planned (roof, windows, cladding)?
- Is there a share of freehold, or a residents' management company?
- For taller buildings: is there an EWS1 form or evidence the cladding is compliant?
- Any restrictions: pets, subletting, holiday lets?
Commonhold and share of freehold
Share of freehold means the flat owners jointly own the building through a company: still leasehold, but you control the charges. Commonhold is a newer form where flats are owned outright; still rare but being encouraged.
Leasehold houses
Mostly banned for new houses in England and Wales since 2022. If you find an older leasehold house, check the ground rent and whether you can buy the freehold.
A note on the numbers. Thresholds, schemes and typical costs are correct as far as we know at the time of writing and are for England and Northern Ireland unless we say otherwise. Rules change and lenders differ. Check the current position, and get advice from a qualified broker before you commit.
Quick answers
Is leasehold bad?
Not inherently. Millions of flats are leasehold and fine. What matters is the lease length, the ground rent terms and the service charge history. A 900-year lease with peppercorn rent and sensible charges is nothing to fear.
Can I extend the lease myself later?
Yes, and the rules now let you do so from day one of owning (the old two-year wait was removed). The cost depends on years left and the property value; under 80 years it jumps.
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