What’s the difference between leasehold and freehold? 

Understanding the difference doesn’t need to be complicated, and it’s one of the most important things you do need to know about your home.  

There are two difference types of ownership when it comes to a property, one being freehold and the other being leasehold. You may come across being known as the ‘freeholder’ or the ‘leaseholder’ and in summery it’s the difference between having a landlord or owning the property outright.   

Freehold 

If you’re a freeholder, you own the property and the land it stands on. Your name will be in the land registry as ‘freeholder’. Houses are more often than not sold freehold, meaning you’re responsible for the property in whole i.e. the roof, the walls etc.  

Leasehold 

When you buy a leasehold property, a leaseholder effectively rents the property from the freeholder for a number of years. That could before 40 years or 999 years. The leasehold ownership of a flat usually relates to everything within the four walls of the flat, including floorboards and plaster to walls and ceiling.  

  •  There’s always a contract between the leaseholder and freeholder, setting out the legal rights of both parties.  
  • The freeholder is, usually, responsible for maintaining the building and keeping on top of repairs. More often than not the freeholder will hire a manage agent to keep on top of maintenance and repairs, especially with the constant changes in regulations.   
  • Leaseholders are responsible for paying a ‘service charge’ which contributes to maintaining the building. This is usually put towards communal areas i.e. stairs, entrance halls, but also the roof or external walls. 
  • Leaseholders have to pay their share of the building insurance, and a ‘ground rent’ to the freeholder.
  • If any work on the property needs to be done, the leaseholder must request permission from the freeholder.  
Buying the freehold on a leasehold property 

If you do find yourself in a leasehold and have a right to buy the house of flat out right, you could go through the process to own the freehold. This is referred to as ‘enfranchisement’.