Two homes can sit side by side on the same street and yet be owned in completely different ways. One is freehold, the other leasehold, and the gap between them shapes everything from your monthly outgoings to how easily you can sell. If you are house-hunting for the first time, this is the distinction worth getting straight before you fall for the kitchen.
Freehold in a sentence
Own the freehold and you own the building and the land it stands on, outright and for good. Most houses in England and Wales are sold this way. There is no landlord above you, no lease counting down, and no annual charge for the privilege of living there. You are responsible for the upkeep, but the decisions are yours.
What leasehold actually means
With leasehold you own the right to live in the property for a fixed number of years, set out in the lease, while the freeholder retains ownership of the building and grounds. Flats are almost always leasehold, because the structure is shared. The lease is a legal contract, and it can run to ninety years, a hundred and twenty-five, or even nine hundred and ninety-nine.
- Ground rent a sum paid to the freeholder, though new leases can no longer charge it
- Service charge your share of maintaining shared areas, lifts and the roof
- Lease length anything under eighty years should make you pause
The eighty-year trap
Once a lease drops below eighty years, extending it becomes markedly more expensive because of a payment known as marriage value. Lenders also grow nervous about short leases, which narrows your pool of future buyers. Always ask the seller for the exact number of years remaining, not a rough figure from memory.
Before you commit
Have your solicitor read the lease in full and flag any unusual clauses, such as restrictions on pets, subletting or alterations. Ask for the last three years of service charge accounts so you can judge whether costs are stable or creeping upward. A flat that looks cheap on paper can carry charges that quietly rival a small mortgage, so do the sums on the full annual outlay, not just the asking price.