Leasehold vs Freehold — What Every Home Buyer in Stockport and Cheshire Needs to Know

Freehold

What Is Freehold?

You Own the Property and the Land It Sits On — Outright and Forever

When you buy a freehold property, you own both the building and the land it stands on outright. There is no time limit on your ownership — it is yours indefinitely. There is no landlord, no ground rent to pay, and no lease that could one day expire.

Freehold is widely considered the more straightforward and desirable form of ownership. The vast majority of houses in England and Wales are sold freehold, and for most buyers purchasing a house, leasehold will not be a consideration.

As a freeholder you are responsible for the maintenance and upkeep of your property in its entirety — but you are also entirely in control. You do not need permission from a landlord to make alterations, and you are not subject to the rules and restrictions that leasehold ownership can bring.

Leasehold

What Is Leasehold?

You Own the Property for a Fixed Period — But Not the Land Beneath It

When you buy a leasehold property, you are purchasing the right to occupy it for a fixed number of years — as set out in the lease. At the end of the lease term, ownership of the property reverts to the freeholder unless the lease is extended.

Leasehold is the most common form of ownership for flats, and it is also found in some new build houses — though the government has moved to restrict leasehold houses in recent years. As a leaseholder, you own your individual flat or property but not the building or land it sits within. The freeholder — sometimes called the landlord — retains ownership of the building and the land.

As a leaseholder you will typically be required to:

• Pay ground rent to the freeholder (though recent law changes have addressed some of the worst historical ground rent issues)
• Pay a service charge — a contribution towards the maintenance and management of the building and communal areas
• Comply with the terms and conditions set out in the lease — which may restrict alterations, subletting, or keeping pets
• Seek permission from the freeholder for certain changes to the property

Watch Out For

The Key Leasehold Issues Buyers Need to Know About

Four Things Your Conveyancing Solicitor Will Check — And Why They Matter

1. Lease Length

The length of the lease is one of the most important factors in a leasehold purchase. A new lease might start at 999 years — effectively meaning ownership in perpetuity. But leases shorten over time, and as they do, they become increasingly problematic.

Once a lease drops below 80 years, it becomes significantly harder and more expensive to extend. Many mortgage lenders will not lend on properties with fewer than 70 or even 80 years remaining. A short lease can make a property difficult to sell and dramatically reduce its value.

2. Service Charges

Service charges are the leaseholder’s contribution to the cost of maintaining the building — cleaning communal areas, maintaining lifts, repairing the roof, buildings insurance and so on. They can vary enormously, from a few hundred pounds a year to several thousand.

Before purchasing a leasehold property, your solicitor should request three years of service charge accounts so you can see what has been charged historically and whether there are any major upcoming works — such as roof repairs or cladding replacement — that could result in a significant one-off bill known as a major works charge.

3. Ground Rent

Ground rent is a payment made by the leaseholder to the freeholder. The Leasehold Reform (Ground Rent) Act 2022 banned ground rent on new residential leases in England and Wales, but many existing leases still contain ground rent clauses — some of which include provisions for the ground rent to double at regular intervals.

4. The Quality of the Freeholder or Management Company

As a leaseholder, you are in an ongoing relationship with whoever owns the freehold or manages the building. A well-run management company that maintains the building properly and responds promptly to issues makes leasehold ownership straightforward. A poorly run one can make it miserable.

Ask your solicitor to raise detailed enquiries about the management of the building, and try to speak to existing residents if possible.

Share of Freehold

What About Share of Freehold?

A Middle Ground That Offers More Control for Flat Owners

Some flats are sold with a share of freehold — meaning the leaseholders collectively own the freehold of the building between them. This is generally considered preferable to leasehold without freehold ownership, because it gives the leaseholders much greater control over the management of the building and the ability to extend their leases at minimal cost.

However, share of freehold comes with its own complexities — including the need for all freeholders to cooperate on decisions about the building — and it still requires careful legal investigation before purchase.

Recent Changes

Recent Leasehold Reforms — What Has Changed?

The Law Around Leasehold Is Changing — Here Is What Buyers Need to Know

Leasehold law in England and Wales has been subject to significant reform in recent years, with more changes in the pipeline. Key developments include:

• The Leasehold Reform (Ground Rent) Act 2022 — banned ground rent on new residential leases
• The Leasehold and Freehold Reform Act 2024 — introduced significant new rights for leaseholders including making it easier and cheaper to extend leases and buy the freehold
• Ongoing reforms — further changes to leasehold law are expected, with the government having signalled its intention to continue improving the rights of leaseholders