What’s the Difference Between Leasehold and Freehold? 

After your offer is accepted, understanding property ownership types like freehold and leasehold becomes crucial. These terms affect your long-term costs, rights, and responsibilities as a homeowner. 

Freehold 

Freehold means you own the property and the land it stands on outright. There’s no ground rent to pay, no service charges for shared areas, and typically fewer restrictions on what you can change. Most houses are freehold, giving you full control and predictable costs. 

Leasehold 

Leasehold means you own the right to live in the property for a fixed number of years. Leaseholds are common for flats, though recent reforms have significantly changed how they’re managed. 

Ground rent is now capped at £250 on existing leases (announced 27 January 2026), which is set to eventually drop to a peppercorn (zero) rate. 

You now have the statutory right to extend your lease by 990 years, up from the old 90-year standard. 

Freeholders must now provide service charge bills in a standardised format, making it easier to see exactly what you’re paying for regarding maintenance and insurance. 

The two-year rule has been abolished. You no longer have to wait two years before you’re legally allowed to extend your lease or buy your freehold. 

Commonhold 

Commonhold is an emerging alternative. The government is banning new leasehold flats in favour of commonhold, where you own your flat freehold and have a direct say in how the building is run through a residents’ association. 

Shared ownership 

Shared ownership combines elements of both ownership types. You buy a share (typically 10–75%) and pay rent on the remainder to a housing association. You can increase your share later through staircasing, eventually reaching 100% ownership. 

The role of your solicitor 

Your solicitor will explain which ownership type applies to your property, review lease terms, and check for onerous clauses that could impact your future resale. 

Next steps 

Setfords’ residential property solicitors specialise in leasehold, freehold, and shared ownership purchases. We stay at the forefront of leasehold reforms, ensuring you benefit from the latest ground rent caps and extension rights while avoiding historical pitfalls. 

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