The Adult Bible - Renting a property

Leasehold Vs. freehold

Buying a property is possibly the biggest financial commitment you will ever make, so it’s important that you understand every detail, and know exactly what you are buying and what you are not.

As well as knowing how many bedrooms your dream home has, and whether the windows are double-glazed, you must find out whether you are purchasing on a freehold or leasehold basis.

What’s the difference?


If you buy a property on a freehold basis, it means you own the plot of ground that the property sits on, as well as the building itself.

Generally, most second-hand houses are sold on a freehold basis. This is straightforward when there is only one property on one plot.

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If you buy a property on a leasehold basis, you are not buying the plot of ground it sits on. You own your property, but only for as long as your lease. When the lease runs out, ownership reverts to the freeholder (landowner).

This is often the case with flats – each flat in a building might have a different owner, but the overall building and its plot could be owned by someone else entirely. Sometimes, the owners of the individual flats will each own a share of the freehold.

Some new-build properties are sold on a leasehold basis, and many shared-ownership homes are too. As a leaseholder, you will have to pay a fee to the freeholder for the lease – this usually covers ground rent and upkeep costs.

It’s worth remembering that trying to buy a property with a leasehold of less than 80 years could cause problems when securing a mortgage and later, attempting to re-sell.

The Adult Bible - Renting a property

Take a look at MoneySavingExpert for more information on freeholds and leaseholds.

Fore more information about how to buy a property, take a look at this.