Understanding the Difference Between Freehold and Leasehold

Most buyers focus on their new home’s location, price, and the number of bedrooms. However, whether the property is freehold or leasehold often gets overlooked until the solicitor mentions it. The difference can affect your costs, rights, and what you can do with your home, so it’s important to know the distinctions.

Two types of ownership

A Freehold property means you own the property and land outright, with no expiry date, and nobody is above you in the ownership chain.

Leasehold property gives you the right to occupy a property for a fixed period rather than owning the land outright. The lease might run for 999 years on a new build or just 65 years on an older flat. The freeholder owns the land and building, while you own the right to occupy your flat. Most leasehold properties are flats.

How responsibilities differ

Homeowners with a leasehold property generally pay annual ground rent, service charges for communal upkeep, and their share of major building works, alongside maintaining their flat's interior. Your service charge typically covers building insurance, repairs to shared areas, and often extras like maintained gardens, parking, or gym facilities. For many flat owners, the arrangement works well once they understand the costs involved.

Freeholders handle every repair from blocked drains to roof replacement, as well as buildings insurance and garden maintenance. You control the purse strings and decide when work gets done.

Your rights under each system

Freehold property ownership gives you the freedom to renovate, extend, and landscape as you see fit (within local council planning regulations). You can add a loft conversion or paint your front door any colour without seeking permission.

The leasehold experience is more restrictive. Written consent is often required for alterations, and you may face limitations on pets, flooring types, or subletting. The specific restrictions depend on your lease terms.

Comparing the costs

Freehold properties sold for sale typically cost more upfront but deliver predictable ongoing expenses - just your own maintenance and insurance.

Leasehold properties often come with unavoidable recurring charges. Ground rent might be £150 yearly, and service charges for a modest flat can reach £1,200 to £2,000 annually, though these costs vary for each property. Major works present another financial risk. Cladding replacement can land you with five-figure bills split between residents. Before committing, request at least three years of service charge accounts to identify any sharp increases or planned major works.

Which works for you?

Most houses are freehold, and most flats are leasehold. Freehold suits buyers who want complete control and predictable costs. Leasehold can work well for flat owners who value shared building management, provided the lease has sufficient years remaining and service charges are reasonable.

Whether you're considering properties across Bournemouth or beyond, Hearnes’ team of local estate agents can guide you through the ownership implications and help you make informed decisions. 

Contact us today to discuss how freehold and leasehold ownership affects your next purchase.