Freehold and leasehold – what do they mean?

28 Oct 2019

Whether you are buying or selling a property, it’s likely that you will come across the terms freehold and leasehold.

While they may sound like complex property jargon, they are important phrases that indicate two different forms of homeownership. But what do they mean?

Here at Online Estate Agents we use our knowledge and experience to take a closer look…


This is when the buyer permanently owns the building and the land that it stands on. The freehold option is preferable for most buyers due to the home belonging to them with no managing agent fees, admin costs or service charges.

The main advantage of freehold over leasehold is that you don’t have to pay ground rent or other associated landlord costs. Through the freehold route, you also won’t have to worry about the lease running out or any disputes with the freeholder. Securing a mortgage this way is also less of a hassle.

What’s more, if you wish to change or modify your property, there are only legal and planning restrictions to keep in mind. This means owners of freehold properties have more freedom when undertaking building projects.

However, it’s your responsibility to maintain the fabric of the building; such as the exterior walls and roof of your home and any garden space you might own.

For these points alone, freeholds tend to be more desirable as they command a higher value than leaseholds. As such, sellers will usually find it easier to sell – and get better value for – a freehold property.

Alternatively, the freehold of a home can be bought by various leaseholders working together – known as ‘collective enfranchisement’ – to own the property outright, but there are a number of complications which can make this very hard to accomplish.


This is when the buyer owns the property for the duration of the lease agreement with the freeholder but not the land that it stands on. Ownership then returns to the freeholder once the lease expires, unless you are able to extend the lease.

When purchasing a leasehold property, the buyer inherits the lease from the previous owner, meaning they will need to consider how many years are left on the lease before making the commitment.

If the lease is for less than 70 years, getting a mortgage could be an issue. Lenders like the lease to run for at least 25 years beyond the end of your mortgage.

What’s more, once you’ve owned the home for two years, you have the right to extend your lease by 90 years as long as you are a qualifying tenant. You are also highly likely to qualify if your original lease was for more than 21 years.

When it comes to repair and maintenance work, you are responsible for the property you own, but maintaining and running the building that your property resides in is the duty of your landlord. Nonetheless, you are required to pay admin costs, service charges, buildings insurance (arranged by the landlord) and ground rent.

In simple terms, a leasehold property means you own the home and all the rights and responsibilities associated with it, but you don’t own the building the home is housed in or the land surrounding it.

Here at Online Estate Agents, we have the tools and knowledge to help you to sell your home efficiently and effectively. For expert advice on selling your home, please contact us on 0330 1244 786 or at

Additionally, you can request a valuation on our website to see how much your home could be worth on the current market.

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