Freehold vs leasehold homes: ownership, ground rent, service charges and lease length

What does each type of ownership give you?

Only two kinds of estate in land can exist as legal estates: an estate in fee simple absolute in possession (the freehold) and a term of years absolute (the leasehold) (Law of Property Act 1925, section 1(1)). With a freehold you own the land and building outright, with no fixed end date. With a leasehold you own a lease for a fixed term, and when the term runs out the right to occupy ends unless the lease is extended. This guide covers homes in England and Wales only.

How do ground rent and service charges work?

Under the Leasehold Reform (Ground Rent) Act 2022, section 4, the most ground rent a regulated long lease can charge is a peppercorn, which is effectively nil, apart from the cases in sections 5 and 6. Check the ground rent in the lease you are buying, because the Act’s rule applies only to leases within its scope.

The law defines a service charge as an amount payable by a tenant of a dwelling, as part of or in addition to the rent, for services, repairs, maintenance, improvements, insurance or the landlord’s costs of management, which varies or may vary according to the relevant costs (Landlord and Tenant Act 1985, section 18(1)). Before you commit, ask for the service charge accounts for the last few years, the reserve fund, and any major works planned or already agreed.

Does the length of a lease affect my mortgage?

Ask your lender whether it sets a minimum remaining lease term, and ask your solicitor or conveyancer to check the lease against it before you exchange contracts.

Can I extend my lease, and what has changed?

Qualifying leaseholders of flats can claim a new lease for 90 years on top of the existing term, at a peppercorn ground rent, on payment of a premium (Leasehold Reform, Housing and Urban Development Act 1993, section 56(1)). GOV.UK says you might be able to extend a house lease by 50 years if you qualify (GOV.UK: extending, changing or ending a lease). Whether you qualify depends on the building and the lease, so take advice before making a claim.

The Leasehold and Freehold Reform Act 2024 changes some of these rules, and most of its provisions come into force by regulations (section 124). The two-year ownership qualifying period was removed from 31 January 2025 (section 27, by SI 2025/57), and sections 49 to 52 and part of section 64 came into force on 3 March 2025 (SI 2025/131). As checked on 2 November 2026, the ban on new long leases of houses (section 1), the 990-year extension (section 33) and the new valuation method (section 37) were not in force. Check the current position before relying on any figure.

Can I buy the freehold?

For a building of flats, the right is collective: the qualifying tenants of the flats can together have the freehold acquired on their behalf (Leasehold Reform, Housing and Urban Development Act 1993, section 1(1)). The building must also meet the conditions in that Act.

A tenant of a leasehold house has a right to acquire the freehold if the statutory conditions are met (Leasehold Reform Act 1967, section 1). Buying the freehold of a house, or of a building of flats, is a legal transaction with its own costs and deadlines, so it needs a solicitor who knows the process.

How do freehold and leasehold compare?

Before you buy a leasehold or freehold home, have the title, the lease and the service charge history checked by an independent solicitor. An independent solicitor you instruct can do this, so you get advice on your own lease or purchase rather than relying on this general guide.