In this guide
| Freehold | Leasehold | |
|---|---|---|
| What you own | Building and land outright | Right to occupy for a set period |
| Duration | Forever | Fixed term (e.g. 99 or 999 years) |
| Ground rent | None | May be payable to freeholder |
| Service charge | None (unless shared estate) | Common, covers communal areas |
| Common for | Houses | Flats, some new build houses |
Most lenders require a lease to have at least 70 to 80 years remaining at the point you apply. If the lease is shorter than this, many will decline to lend. A short lease also reduces the property's value because extending a lease becomes increasingly expensive as it drops below 80 years.
New legislation (2024): The Leasehold and Freehold Reform Act aims to make lease extensions cheaper and simpler. Check with your solicitor for the latest position, as implementation is still being phased in.
For most qualifying new long residential leases in England and Wales granted from 30 June 2022, ground rent is capped at a peppercorn (effectively zero). Retirement-property leases came under the rules later; exceptions apply. Existing leases may still have escalating ground rent clauses, which some lenders consider when assessing affordability.
Unsure about leasehold?
We deal with leasehold purchases regularly and can guide you through credit checks on short leases, service charges, and the lenders who are most flexible.
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