Leasehold vs. Freehold: What Buyers Need to Know in 2025

What’s the Difference?

Freehold:
When you buy a freehold property, you own both the property and the land it stands on, indefinitely. This gives you full control, meaning no annual ground rent, and you don’t have to get permission from anyone else for major changes to the property. In simple terms, you have complete ownership of the property and land.

Leasehold:
In contrast, leasehold ownership means you only own the property for a set number of years (often up to 999 years) but do not own the land. The land is owned by a freeholder, and you may have to pay ground rent, service charges, and obtain permission from the freeholder for major alterations to the property.

Why It Matters in 2025

Recent reforms in the leasehold system have aimed to make things fairer for leaseholders, particularly around limiting excessive ground rents and offering an easier path to extending leases or buying the freehold. However, while these reforms help, there are still important things to consider before deciding between leasehold and freehold ownership.

Key Considerations for Buyers

1. Lease Length:
   If you're considering a leasehold property, pay close attention to the length of the lease. Properties with shorter leases (typically under 80 years) can be much harder to sell and can require costly lease extensions. This can have a significant impact on the property's resale value and long-term affordability.

2. Ongoing Costs:
   When buying a leasehold property, ongoing costs are a critical factor. These can include service charges for maintaining communal areas, ground rents, and potential future increases in these costs. Unlike freehold properties, these additional expenses can add up and affect your budget over time.

3. Resale & Mortgageability:
   Some mortgage lenders are hesitant to offer loans on leasehold properties with short leases, making resale more challenging. This is especially important if you’re planning to sell the property in the future. Make sure you understand how the lease could impact both your ability to get a mortgage and the resale value of the property.

4. New-Build Developments:
   Many new apartments are sold as leasehold properties. While they often come with appealing features like modern amenities and desirable locations, it’s crucial to check the leasehold terms carefully before committing. Ensure you understand the costs and restrictions associated with the property, including service charges and potential rent reviews.

Making an Informed Choice

Whether you're leaning towards a freehold house or considering a leasehold apartment, it’s vital to be aware of the long-term financial and legal implications. Freehold properties tend to provide more security, but leasehold properties can be more affordable initially. That said, they come with additional ongoing costs and potential complications.

If you're unsure which option is right for you, getting professional advice is essential to making a confident, informed decision. Our team at James Anderson is here to provide expert guidance through every step of your homebuying journey.

Looking for Your Perfect Home?

Whether you’re considering a leasehold or freehold property in 2025, we’re here to help. Our team has in-depth knowledge of the local market and can guide you to the best option for your lifestyle and investment goals. Contact us today for personalised advice and start your property journey with confidence.