Leasehold vs. Freehold: What’s the Best Choice for Property Buyers?

Understanding Property Ownership & Making the Right Investment Decision

When buying a property in the UK, one of the most critical factors to consider is whether it is leasehold or freehold. This distinction affects ownership rights, long-term costs, and financial security.

For buyers in West Sussex, Surrey, and South London, understanding the differences, advantages, and potential pitfalls of each can help you make an informed decision and avoid unexpected expenses.

What’s the Difference Between Leasehold & Freehold?

Freehold

You own the property and the land it stands on outright.
No ground rent or service charges.
Full control over property modifications and maintenance.

Leasehold

You own the property for a fixed period, but not the land.
You pay ground rent, service charges, and potential lease extension fees.
Subject to leaseholder rules and restrictions.

Leasehold vs. Freehold: Pros & Cons

Pros of Freehold Properties

Full Ownership – No time limits or lease restrictions.
No Ground Rent or Service Charges – Lower ongoing costs.
More Control – No need to seek permission for renovations.

Cons of Freehold Properties

Higher Upfront Cost – Freeholds tend to be more expensive than leaseholds.
Maintenance Responsibility – You are solely responsible for all repairs and upkeep.

Pros of Leasehold Properties

Lower Purchase Price – Leaseholds are often cheaper than freeholds.
Shared Maintenance Responsibility – The freeholder manages external repairs and upkeep.
Good for Flats & City Living – Most apartments are leasehold, making them more accessible to buyers.

Cons of Leasehold Properties

Ground Rent & Service Charges – Ongoing costs that can increase over time.
Lease Expiry Risks – If the lease drops below 80 years, it can become expensive to renew.
Restrictions on Use – Some leases prohibit subletting, pets, or renovations.

Understanding Leasehold Terms & Risks

Lease Length Matters

100+ years remaining – Good investment, mortgage-friendly.
80-99 years – May affect value, consider extending.
Below 80 years – Can be difficult to mortgage and expensive to extend.

Ground Rent & Service Charges Can Increase

Some leases contain escalating ground rents – always check the terms.
High service charges can make a property less profitable for investors.

Lease Extensions Can Be Costly

Leaseholders can extend their lease under the Leasehold Reform Act.
Costs vary based on the remaining years and property value.

What’s the Best Choice for Buyers?

Choose Freehold If:

You want complete ownership & control.
You prefer no ongoing ground rent or service fees.
You’re buying a house rather than a flat.

Choose Leasehold If:

You’re buying a flat or apartment.
You want a lower initial purchase price.
You’re comfortable with ongoing fees & lease terms.

Final Thoughts: Which Ownership Type is Best for You?

Freehold offers long-term security, control, and lower ongoing costs.
Leasehold can be more affordable but comes with restrictions and extra fees.
Always check the lease terms before committing to a purchase.

Let CPA Property Help You Make the Right Choice

Whether you’re buying, selling, or investing, CPA Property provides:

Expert guidance on leasehold & freehold purchases
Property valuations & market insights
Support with lease extensions & negotiations