If you own the freehold of your home, it implies that you own the structure and the land it sits on. If your residential or commercial property is leasehold, you own the residential or commercial property but not the structure or land and must pay ground rent to the freeholder.

Freehold vs leasehold: the essential distinctions

Do you understand what is meant by a freehold or leasehold residential or commercial property? Experienced estate representative, Ian Harris helps describe the key distinctions.

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What does leasehold indicate?

You are acquiring a lease from the freeholder for the right to reside in the residential or commercial property for a set number of years. You will not technically own the residential or commercial property outright, the freeholder (or property manager) will continue to own the residential or commercial property and the ground it rests on. Leasehold is prevalent when purchasing a flat or apartment or condo as it sits within a bigger structure.

The number of leasehold homes has however grown recently, particularly with new builds that are sold directly through the designer.

Recent modifications to the law

The Leasehold and Freehold Act 2024 is now law, but individual parts of the Act are being executed one at a time so not whatever has actually been done yet. You can see the development of the changes here. Eventually there will be a restriction on the sale of brand-new leasehold flats, making Commonhold the brand-new default tenure instead, where each unit-holder owns the freehold of their home.

Find out more about what's changing for leasehold

Main things to understand that have actually been executed up until now are:

- If you own a flat, you can now extend your lease without waiting two years first (as of January 2025).

• This implies that more leaseholders in mixed-use buildings can apply for the right to manage