Differences Between Freehold and Leasehold in England

In this article of our informative series about the real estate purchase process in England, we will talk about the differences between freehold and leasehold.

When you buy a real estate in England, you can legally own it in two different ways. This property right in law is called Freehold and Leasehold. Both types of property ownership are deep-rooted systems that have existed since the Feudal period and are still valid today.

Before explaining the differences between Freehold and Leasehold, we need to define these concepts;

Freehold Ownership

Freehold ownership refers to the ownership of the entire land and the structure built on it. To give an example, let’s think of a land and a 3-flat apartment building built on it. The freehold owner expresses ownership of both this land and the entire structure on the land. The owner of the freehold is called Landlord.

Freehold property right,

It is based on the principle of absolute ownership.
Both the land and the structure on it are owned.
There is no time limit on property ownership rights, that is, it is indefinite.
Since it is absolute ownership, it is possible to make changes and repairs that you think would be appropriate to your own real estate.
It is not possible to pay ground rent or service charge.

Leasehold Ownership

With leasehold ownership, you own the real estate for a limited period of time. Most of the time, the flats of an apartment building are owned by leasehold. If we continue with the example we have just given, the land and the land right of the 3-flat building on it belong to the freehold owner, and the flats in this 3-flat building can be transferred to the flat owner with the leasehold ownership right. In fact, this is similar to flat ownership rights in Turkey.

The terms and length of leasehold ownership vary depending on the agreement made with the freeholder.

Leasehold property right,

It is a temporary property right. This period varies between 125 years and 999 years.
It is a must to comply with the terms of the contract between you and the landowner.
Apart from the principal paid when purchasing a leasehold, a ground rent payment called ground rent is made once a year.
This payment is usually a symbolic figure and varies between £10 and £550 per year.
On some real estate sites, you may also have to pay dues under the name of a service charge.