The two main ways to own UK property are freehold and leasehold. The difference is fundamental: one is permanent ownership of both building and land; the other is a time-limited lease from someone else.
Freehold
Freehold ownership means you own the property and the land beneath it outright, with no end date. You can alter the building (subject to planning and restrictive covenants), sell it, inherit it, or demolish it, within the bounds of the law. You pay no rent to anyone.
Most UK houses are freehold. Some newer estate houses are leasehold — a practice that attracted significant criticism and has been largely curtailed by the Leasehold and Freehold Reform Act 2024.
Leasehold
Leasehold ownership means you have a lease from the freeholder — typically 99, 125, 250, or 999 years — to occupy and use the property. During that period you effectively “own” the property for most practical purposes, but:
- You usually pay ground rent to the freeholder (capped or reducing under recent reforms).
- You usually pay service charges for maintenance of common parts (in a block of flats, this includes the structure, roof, lifts, gardens, lighting, etc.).
- You may need freeholder consent for significant alterations, subletting, or keeping pets.
- When the lease expires, ownership reverts to the freeholder (unless extended).
Most UK flats are leasehold. The freeholder is often a separate company, a property management company, or sometimes a self-formed residents’ management company.
Why lease length matters when selling
Lease length materially affects saleability:
- Over 125 years remaining: Generally no impact. Buyers are comfortable, lenders are comfortable.
- 85–125 years: Fine for most lenders. No major concerns.
- 70–85 years: Marginal. Some lenders restrict; buyers start to care.
- Under 70 years: Significantly harder to mortgage. Many lenders refuse. Price impact.
- Under 80 years (the “marriage value” threshold): Extension becomes much more expensive. Buyers typically insist on the seller extending before completion.
- Under 50 years: Effectively unmortgageable. Cash buyers only.
If you’re selling a leasehold flat with a short lease, you have three options: extend the lease before marketing (slow, costly — typically £5,000–£30,000+ and 3–9 months), sell “cash buyers only” at a significant discount, or sell directly to a cash buyer who can factor the lease length into their written offer.
Service charges, ground rent, and the LPE1
When selling a leasehold flat, the buyer’s solicitor will request an LPE1 form — a standard management pack from the freeholder containing service charge history, planned works, insurance, and leaseholder obligations. LPE1 packs are often slow and expensive to obtain (£250–£600, sometimes 4–8 weeks), and can stall a sale.
Commonhold and reforms
The Leasehold and Freehold Reform Act 2024 introduced changes to simplify lease extension, cap future ground rents, and in some cases enable conversion of flats to “commonhold” — a third form of tenure. Full implementation is still rolling out through 2026 and 2027.
Related
- LPE1 form — the management pack required for leasehold sales.
- Restrictive covenant — separate legal restrictions that apply to both tenures.
- Cash buyer — why short-lease flats are often sold directly to cash buyers.