06, June, 2023

Buying freehold vs. leasehold – what are the differences?

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Buying freehold vs freehold- what are the differences?
Buying freehold means you own the land as well as the building on the land. Leasehold is often for flats, where you own your flat but not the building that it’s on the the land that it’s on.

If you’re looking to buy a house, you’ve most likely seen various properties described as freehold and leasehold. Knowing the difference between the two is essential, so you know exactly what you’re buying.

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Freehold properties

The freeholder of a property owns it outright, including the land that it’s built on. You, as the owner, will be responsible for maintaining your property and your estate, which means factoring in the cost of this for your budget when buying it. Most houses are freehold but can be a leasehold property if they’re on specific schemes, such as shared ownership.

You can also own a share of a freehold. If you’ve bought a flat in a block, for example, you and some of the other people who own apartments in the building can come together to buy shares. At least have of those leaseholders will need to agree to buy a stock. This will give you more control of your property, and also allows you to extend the lease on your terms.

To apply for a share of the freehold, you will need to come together with the other leaseholders interested and serve a Section 13 to the landlord. This can be expensive, and it’s recommended to set up a company together to manage the building – or hire a managing agent to take care of any issues.


If you’re buying a property leasehold, you will own the property for the length of the lease agreement with the freeholder. At the end of the lease, ownership will return to the freeholder. You can negotiate an extension on the lease at a cost. Usually, flats and maisonettes are leaseholds; you own the property in the building, but not the actual building that the property is in.

Buying a leasehold property means that you take the lease over from the previous owner. It would be best if you considered a few things before buying a leasehold property –

  • How much longer is there left on the lease?
  • Are there regular service charges or related costs?
  • If the lease is short, will it affect your resale value or securing a mortgage?

How important is the length of your lease?

If you’re looking at buying a property with a lease under 70 years, you may find it more challenging to secure a mortgage. Lenders will often require your lease to have at least 30 years extra on the mortgage that you’re looking to take out- meaning that it can also be hard to sell the property down the line if the lease is quite short.

Is there a way to extend the lease?

If you are a qualifying tenant, you’re able to apply for an extension on the lease. To qualify you’ll have to have more than 21 years on the original lease, and have owned the property for two or more years. The freeholder will charge you for extending the lease, but the amount will vary depending on the length of the extension, the size and the type of property you’re in.

Typical charges for leasehold properties

As you don’t own the land, your landlord is responsible for the running and maintenance of the building. Usually, leaseholders will pay for this with a service charge. This tends to cover –

  • Maintaining communal gardens
  • Electricity bills for communal areas
  • Repairs and maintenance of exterior walls

You may also be charged ground rent, admin fees, or building insurance. It’s essential to know about these costs up front so you can factor them in, as they may change what you can afford monthly for your mortgage.

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What are my rights as a leaseholder?

You have a right to ensure that your landlord isn’t taking advantage of you financially for the upkeep of the grounds. If you feel that the landlord is asking for too much, you can –

  • Ask to see a summary of how the service charge is spent
  • Proof of the calculations
  • Receipts for any work that has been done.

Your landlord will also have to consult you on –

  • Any building work that will cost you over £250 in the service charge
  • Any actions that will take over a year to complete before it commences
  • Any work that will cost you over £100 a year before it starts.

I’m not happy with how the property is being managed. What do I do?

You have the right to manage – this will let leaseholders take on some of the responsibilities of maintaining the building from the landlord. You don’t have to prove that the current landlord is managing it poorly, but you will need to set up a Management Company with other leaseholders to properly manage the building.

You can also apply to appoint a new manager. You will need to prove that the current management is poor, with proof of unfair costs or breaches of the agreement.

Knowing the difference between leasehold and freehold when buying a house is vital. If you are currently struggling to sell your house due to a short lease, get in contact with us at We Buy Any House. We can give you a free offer on your property and see how we can help you reach a quick and easy sale.

We buy any home in as little as 7 days, or timescales to suit you. Head to our website for more information.

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