Leasehold vs Freehold: What’s the Difference for First-Time Buyers?
- Christina Vassiliades
- Sep 16
- 4 min read
Updated: 17 September 2025
As a first-time buyer in the UK you will need to choose between purchasing a freehold or a leasehold property. The distinction is critical.
With freehold, you own both the property and the land outright, often with fewer restrictions and ongoing costs.
With leasehold, you own the property for the length of the lease, but not the land it sits on. Leaseholders usually pay service charges, ground rent (though this is being phased out in many cases), and must seek permission for major changes.
Freehold is generally preferred for houses, while leasehold is common for flats. Mortgage lenders may be cautious with short leases (under 80 years), so first-time buyers must check lease length carefully. Extending a lease can be costly, sometimes tens of thousands of pounds.
Preparation is key. Reviewing lease terms, budgeting for ongoing charges, and seeking expert mortgage advice can save you from pitfalls. A broker can explain which lenders are comfortable with certain leasehold terms and help you secure a mortgage that matches your circumstances.
Leasehold vs Freehold: A First-Time Buyer’s Guide to Property Ownership
What Is Freehold Ownership?
Freehold means you own both the property and the land beneath it outright, with no time limit. You are responsible for repairs and maintenance but do not pay ground rent or service charges. Most UK houses are freehold.
What Is Leasehold Ownership?
Leasehold means you own the property for a set number of years under a lease agreement, but not the land. The freeholder owns the land and often the building structure. Leaseholders typically pay annual service charges, contribute to building insurance, and sometimes ground rent. Flats are usually leasehold because they sit on shared land.
Why Does Leasehold Still Exist?
Leasehold allows multiple owners to share responsibility for communal areas. For example, in a block of flats, leaseholders contribute to upkeep of roofs, lifts, and gardens. However, the system has been criticised for unfair fees and lack of control, which is why reforms are ongoing.
Do Mortgage Lenders Treat Leasehold and Freehold Differently?
Yes. Freehold is straightforward, but leasehold is scrutinised more closely. Lenders often require:
At least 80 years remaining on the lease at purchase.
Reasonable service charges.
No escalating ground rent clauses.
If the lease length is short, some mainstream lenders may decline. Specialist lenders may still consider it, but rates may be higher.
How Long Should a Lease Be When Buying?
A lease should ideally be over 85 years. Below 80 years, the cost of extension increases significantly because “marriage value” is added. Extending leases can cost tens of thousands of pounds.
What Are the Hidden Costs of Leasehold?
Leasehold costs often include:
Ground rent (though new rules are reducing this).
Service charges for communal maintenance.
Major works contributions for repairs like roof replacements.
Lease extension fees.
Permission charges for alterations.
These can catch buyers off-guard, leading to affordability issues later.
Leasehold vs Freehold: Pros and Cons for First-Time Buyers
Freehold Pros
Full ownership, no expiry.
No ground rent or service charges.
More freedom to make changes.
Freehold Cons
Full responsibility for repairs.
Higher upfront price compared to leasehold flats.
Leasehold Pros
Lower purchase prices, especially for flats.
Shared responsibility for communal areas.
Sometimes located in prime city centres.
Leasehold Cons
Lease length restrictions.
Ongoing charges.
Limited control over property alterations.
Potentially harder to sell if lease is short.
Why This Matters in 2025
Reforms to leasehold are ongoing. Ground rent has been capped in most new leases, and there are moves to simplify lease extension rights. First-time buyers must keep informed, as lenders and solicitors are adjusting their criteria to align with new legislation.
What Surveyors and Underwriters Look For
Surveyors assess property condition, while underwriters check affordability, lease length, and whether lease terms fit lender policy. A single problematic clause, such as doubling ground rent, can jeopardise your mortgage offer.
Lender Acceptance Spectrum: From Mainstream to Specialist
Mainstream lenders: Accept strong leases (85+ years, low charges).
Cautious lenders: May set stricter conditions (90+ years).
Specialist lenders: Sometimes accept shorter leases if other factors (deposit, income) are strong.
Policy Exceptions and Broker Insights
Some lenders make policy exceptions. For example, if a buyer has a large deposit or high income, they may waive strict lease requirements. Brokers often secure these outcomes because they know how to present compensating strengths to underwriters.
Common Mistakes First-Time Buyers Make
Ignoring lease length.
Underestimating service charges.
Assuming all lenders accept leaseholds equally.
Failing to plan for lease extensions.
Case Study: First-Time Buyer in Bristol
Emily, a 27-year-old first-time buyer, wanted a flat with a 78-year lease. Several high-street lenders declined. A broker sourced a specialist lender comfortable with her strong deposit and income, allowing her to purchase. She later budgeted for a lease extension, saving her from future resale issues.
FAQs
Is leasehold always worse than freehold?
Not necessarily. Flats are usually leasehold, and many people are perfectly happy with them, provided costs are clear and lease length is healthy.
Can I get a mortgage on a 70-year lease?
It may be possible with a specialist lender, but costs and options will be limited. Extending the lease first may be advisable.
Do leasehold properties lose value faster?
Yes, especially as leases approach 80 years. Short leases reduce market value.
Can leaseholders ever buy the freehold?
Yes, in many cases leaseholders can join together to buy the freehold from the landlord.
Is ground rent still legal?
Yes, but it is now banned on most new residential leases. Older leases may still carry it.
Do leasehold properties take longer to buy?
Often yes, as solicitors need to review detailed lease terms and service charge history.
Checklist for Next Steps
Review lease length.
Ask about service charges and ground rent.
Request lease extension estimate if close to 80 years.
Factor costs into affordability.
Speak with a broker to understand which lenders are suitable.
Conclusion
Understanding leasehold vs freehold is vital for first-time buyers. Freehold gives simplicity and control, while leasehold requires more care and planning. The right choice depends on property type, budget, and long-term plans.
At Manor Mortgages Direct, we are expert mortgage advisers with extensive experience helping first-time buyers navigate leasehold and freehold purchases.
Get in touch today on 01275 399299.
Written by Ben Stephenson, CeMAP‑qualified Mortgage Broker, and reviewed by Mortgage Experts.
Manor Mortgages Direct is FCA authorised (496907), has business for nearly 30 years and is highly positively reviewed (4.9 rated on Google). We have helped thousands successfully secure the right mortgage. Bristol based mortgage brokers, but can assist nationwide.