Freehold vs Leasehold: What’s the Real Difference?

Waqas Ali
Oct 31
2 min read

Why Ownership Type Matters

In the UK, purchasing property not only involves purchasing physical assets, but also establishing a legal connection with the land it is situated on.

That relationship comes in two main forms: freehold and leasehold. The difference might seem technical, but it shapes everything from your control over the property to your long-term costs, resale value, and mortgage options.

At Genius Academy, we teach investors that understanding tenure isn’t legal trivia — it’s risk management.

What Is Freehold?

"Freehold property" means you own both the building and the land beneath it outright— indefinitely.

Key Advantages:

Full control: You can alter, extend, or manage the property (subject to planning permission).
No ground rent or service charges: You don’t pay a landlord or freeholder.
Simpler ownership: Ideal for houses and long-term investment.

Considerations:

You’re fully responsible for maintenance, including structure and roof.
Flats are rarely freehold, since shared spaces require joint management.

What Is Leasehold?

A leasehold property means you own the building for a set number of years, but not the land it’s built on. The land belongs to a separate freeholder (the landlord).

Common For:

Flats and apartments where the land and structure are shared.
New-build developments with communal services and amenities.

Key Terms to Know:

Lease length: Often 99, 125, or 999 years. When it runs low (below 80 years), property value and mortgageability drop.
Ground rent: An annual payment to the freeholder (many new leases now ban this).
Service charge: Covers maintenance for shared spaces — roofs, lifts, gardens, and hallways.

Example: The 80-Year Lease Problem

Let’s say you buy a flat with 82 years left on the lease. After two years, it drops to 80 years —the critical point, where:

Lease extensions become expensive (due to marriage value).
Many lenders refuse to remortgage.
Value can fall by 5–10% overnight.

Extending early can save thousands, which is why savvy investors always check lease length before buying.

Step 1: How It Affects Property Investors

Mortgageability

Lenders prefer leases over 85 years. Under 70, only specialist lenders may consider it.

Exit Strategy

Short leases reduce resale value and limit your buyer pool.

Costs

Ground rent and service charges can erode your net yield.

Control

Major works and structural decisions are collective — meaning your say depends on other leaseholders and the freeholder.

In short: freeholds offer control and predictability, while leaseholds require due diligence and awareness of shared responsibilities.

Step 2: When Leasehold Can Still Make Sense

Leasehold isn’t always a disadvantage. In some cases, it offers practical and financial benefits:

City-centred apartments often deliver excellent yields and steady capital growth.
Maintenance is managed for you — perfect for hands-off investors.
Peppercorn leases (no ground rent) are increasingly common in modern developments.

The key is understanding what’s in the lease agreement, not just what’s in the brochure.

Reflection: Ownership Is More Than a Title

Freehold gives independence; leasehold gives convenience. Neither is “better” — they’re suited to different goals.

The smart investor doesn’t avoid leaseholds — they understand the terms, costs, and timelines that come with them.

At Genius Academy, we believe clarity is power — and tenure is the foundation of every sound property decision.