Whether a home is leasehold or freehold changes what you own, what you pay each year, and how long the legal work takes. It is one of the first things a conveyancer checks, and it catches a lot of buyers by surprise. Here is what the two really mean, and why leasehold almost always needs more time and care.
1 The basic difference between leasehold and freehold
Freehold means you own the building and the land it sits on, outright and with no end date. Leasehold means you own the right to live in the property for a fixed number of years set out in a legal document called the lease. Someone else, the freeholder (or landlord), owns the building and the ground beneath it.
Most houses in England and Wales are freehold. Most flats are leasehold, because when one building holds several homes stacked on top of each other, someone has to own and look after the shared structure, the roof, the hallways and the grounds. The lease sets out how that works: your rights, your responsibilities, and what you pay towards the upkeep.
There is a third arrangement worth knowing about. Share of freehold is where the flat owners jointly own the freehold of the building, usually through a company, while still each holding a lease. It tends to give owners more say over costs and lease length, though the leasehold rules still apply to the flat itself.
2 The extra paperwork that comes with leasehold
Leasehold purchases involve documents that simply do not exist on a freehold sale, and gathering them is often the slowest part of the deal. The big one is the management pack (sometimes called the leasehold information pack or LPE1). It comes from the freeholder or managing agent, and the seller usually has to request it and pay for it.
Your conveyancer reads through that pack and the lease itself to check for anything that could affect you. The two things to understand first are the running costs and the lease length.
Ground rent
Ground rent is a yearly payment to the freeholder for the land your home sits on. The Leasehold Reform (Ground Rent) Act 2022 banned ground rent on most new residential leases granted from June 2022 onwards, so newer leases often have a peppercorn (effectively zero) ground rent. Older leases can still carry a real ground rent, and some have terms that increase it over time, which lenders dislike. Your conveyancer will flag any escalating ground rent, because it can affect both affordability and resale.
Service charge
The service charge pays for looking after the shared parts of the building: cleaning, insurance, lifts, gardening, repairs, and often a sinking fund for major works. It varies hugely by building. It can run from a few hundred pounds a year to several thousand for blocks with lifts, a concierge or recent major works. Ask what the service charge has been over the last few years, and whether any large works are planned, because a big bill can land soon after you move in.
Lease length and the 80-year point
Lease length matters more than almost anything else on a flat. A lease is a wasting asset: the fewer years left, the harder the property is to mortgage and sell. The figure to watch is 80 years. Once a lease drops below 80 years, the cost of extending it rises sharply because of an extra payment called marriage value, and many lenders become reluctant to lend at all. Leasehold reform is in the process of changing parts of this system, including measures to remove marriage value, so the detail may shift over the next few years. For now, treat anything approaching 80 years as a serious negotiating point, and take advice before you commit.
If a lease is heading towards 80 years, ask the seller to start the extension, or to reflect the cost in the price, before you exchange. Sorting it after completion is usually slower and more expensive. Depending on which reforms are in force when you buy, you may also face a qualifying period before you can extend, so get advice on the current rules early.
3 Why leasehold conveyancing takes longer
Leasehold simply has more moving parts, and several of them sit outside your conveyancer's control. A freehold purchase often runs around 8 to 12 weeks, though a chain can push it longer. Leasehold tends to take longer still, mainly because everyone is waiting on third parties for information.
- The seller has to order the management pack from the freeholder or managing agent, who can take weeks to produce it and may charge a fee.
- Your conveyancer raises extra enquiries on the lease, the ground rent, the service charge accounts and any planned works, then waits for replies.
- The freeholder or managing agent may need to confirm there are no service charge arrears and provide a certificate.
- After completion there are leasehold formalities, such as serving notice of the sale on the freeholder and registering it, which add steps a freehold deal never has.
You can read the full sequence in our step-by-step conveyancing guide, and there are practical ways to keep things moving in our guide on how to speed up your conveyancing. The single best thing a leasehold seller can do is order the management pack the moment the property goes under offer.
If you are selling a flat, ask your conveyancer or managing agent to request the management pack as early as you can. It is often the longest wait in the whole transaction, so getting ahead of it can save weeks.
4 What this means for buyers and costs
Leasehold work is more involved, so leasehold conveyancing usually costs a little more than freehold. Most firms add a leasehold supplement to their fee to cover the extra reading and enquiries, and there are additional disbursements too, such as the freeholder's pack fee and the notice fees payable after completion. When you compare quotes, check that any leasehold supplement is included, so you are comparing like for like.
None of this should put you off a leasehold home. Plenty of people own flats happily for years. The point is to go in with your eyes open: know the lease length, understand the yearly costs, and use a conveyancer who reads the lease properly rather than skimming it. A clear quote up front, with the leasehold extras spelled out, is the simplest way to avoid surprises later.