The leasehold scandal has highlighted the importance of understanding property tenure. Here's what you need to know before buying.
Understanding the difference between leasehold and freehold is essential for UK property buyers. Getting this wrong can cost you thousands.
## Freehold Explained
### What You Own - The building AND the land - Outright ownership - No ground rent or lease restrictions
### Typical Properties - Most houses - Some maisonettes - Converted flats (share of freehold)
## Leasehold Explained
### What You Own - Right to occupy for lease term - NOT the land or building structure - Subject to lease conditions
### Typical Properties - Most flats/apartments - Some new-build houses (controversial) - Commercial premises
## Critical Leasehold Issues
### Lease Length - Under 80 years = mortgage difficulties - Under 70 years = significant discount - Lease extension costs increase as length decreases
### Ground Rent - Historical scandal with doubling clauses - New builds now ground rent free (2022 reform) - Check carefully on older leases
### Service Charges - Can be substantial - Review last 3 years' accounts - Understand major works funds
### Permission Requirements - Subletting restrictions - Pet ownership - Alterations approval
## Lease Extension
### Statutory Right After 2 years' ownership, you can extend by 90 years at a peppercorn rent. Cost varies by: - Remaining lease length - Property value - Ground rent amount
### 2024 Reforms New legislation makes extension easier and cheaper—check latest position.
## Before You Buy
✅ Check lease length (minimum 85+ years ideal) ✅ Review ground rent terms ✅ Request 3 years' service charge accounts ✅ Ask about planned major works ✅ Understand building insurance arrangements