Leasehold vs Freehold in London: What Every Buyer Needs to Know

If you're buying a flat in Hammersmith, Fulham, Kensington or anywhere else in West London, there's an overwhelming chance it will be leasehold. And if you're buying a house, it'll almost certainly be freehold. But what do these terms actually mean for you as a buyer — and what are the hidden traps that first-time buyers in particular often don't discover until it's too late? This guide from Hammersmith Surveyors cuts through the jargon.

I want to start with a story, because it illustrates why this matters in a very practical way. A client of mine — let's call her Priya — bought a beautiful ground-floor flat in a converted Victorian terrace in Brook Green three years ago. She paid £480,000. The lease had 73 years remaining. Her solicitor mentioned it, but reassured her it wouldn't be a problem. Her mortgage lender said the same.

Fast forward to 2026. Priya wants to sell. Her estate agent has had three separate buyers pull out when their mortgage valuers flagged the lease length. The flat is now effectively unsellable without a lease extension — which will cost her around £28,000 at today's premium. She also discovered, reading the lease more carefully, that her freeholder charges £500 for permission to sublet — which she was doing without realising she needed consent. There's a story in almost every lease, if you know where to look.

The Basics: What Do These Terms Actually Mean?

Freehold means you own the property and the land it stands on outright and indefinitely. You don't owe ground rent to anyone. You don't need permission to make changes (beyond planning and building regulations). There's no time limit on your ownership.

Leasehold means you've bought the right to occupy a property for a fixed period — the term of the lease. When the lease expires, ownership theoretically returns to the freeholder. In practice, leaseholders have statutory rights to extend their leases, but this costs money and involves a formal legal process.

In London, almost all purpose-built flats are leasehold. Converted flats (a Victorian house split into two or three flats) are also leasehold in the vast majority of cases. Houses are almost always freehold — though there was a period in the 2000s and 2010s when some developers sold new-build houses on leasehold terms, a practice that has now been largely banned.

Lease Length: Why It Matters More Than You Think

When you buy a leasehold flat, you buy the lease as it stands — including however many years remain on it. If the flat was first sold on a 99-year lease in 1970, you'd now be buying a lease with 43 years remaining. That is a serious problem.

Here's why lease length matters so much in practical terms:

• Mortgage availability: Most lenders require a minimum of 70–85 years remaining at the end of the mortgage term. On a 25-year mortgage taken out today, you'd need at least 95–110 years remaining from the start. Lenders are increasingly strict — check with your mortgage broker before you fall in love with any leasehold property.
• Resale value: A flat with a short lease is harder to sell and sells for less. Estate agents often quote "lease length" as a key selling point for a reason.
• Extension costs: Once a lease drops below 80 years, something called "marriage value" kicks in when extending. This significantly increases the premium you have to pay. The premium for extending a lease on a £400,000 flat goes from roughly £8,000–£12,000 at 85 years to £25,000–£40,000 at 75 years. The maths are brutal.

Service Charges and Ground Rent

Service charges are annual fees paid by leaseholders to the freeholder (or a management company) to cover the maintenance and repair of the building. This includes the roof, external walls, communal hallways, lifts, gardens, and the building's insurance.

In London, service charges on typical converted Victorian flats range from £1,500 to £4,000 per year. On purpose-built blocks with concierges and shared amenities, they can be £5,000–£15,000 per year. Service charges are not fixed — the freeholder can increase them to reflect actual costs, including major works.

This brings us to one of the most significant leasehold risks: major works bills. If the freeholder decides to replace the roof, repair the lift or refurbish communal areas, leaseholders can face bills of £10,000–£30,000 or more — often with relatively little notice. In law, freeholders must follow a Section 20 consultation process for works over £250 per leaseholder, but this doesn't prevent the cost itself.

Ground rent is an annual payment to the freeholder for the right to occupy the land. Historically, ground rents were nominal (£50–£100 per year). However, following a period of abusive ground rent clauses (doubling every 10–25 years in some cases), the Leasehold Reform (Ground Rent) Act 2022 capped ground rent on new leases at a "peppercorn" (effectively zero). Existing leases with escalating ground rents remain a significant issue.

Share of Freehold: The Best of Both Worlds?

Share of freehold (SOF) is an arrangement where the leaseholders of a building collectively own the freehold. Rather than paying ground rent to an external freeholder, the residents effectively own and manage the building themselves, usually through a residents' management company.

The key benefits of share of freehold are:

• No ground rent payable (to an external freeholder)
• Greater control over service charges and managing agents
• The ability to extend leases to 999 years at minimal cost
• Greater building management responsiveness

Flats with share of freehold tend to sell slightly more easily and sometimes command a small premium. They are generally a better investment position than a straightforward leasehold — though not always. A poorly managed SOF building with fractious residents can be worse than a well-managed external freeholder.

The 2024 Leasehold Reform: What's Changed?

The Leasehold and Freehold Reform Act 2024 made significant changes to leasehold law in England and Wales. Key reforms include:

• The abolition of the two-year ownership qualification to extend a lease — you can now serve notice on day one of ownership
• Standard lease extensions extended to 990 years (up from 90 years for flats)
• Reforms to the premium calculation for lease extensions (removing marriage value in some circumstances — though full implementation requires secondary legislation)
• Improved rights for leaseholders to challenge unreasonable service charges
• Removal of the presumption that leaseholders pay freeholder's legal costs in disputes

These are meaningful improvements for existing leaseholders. However, many of the most significant reforms are still being implemented. It's important not to assume that because reform is happening, leasehold problems have been resolved — the practical landscape is still complex.

What to Check Before You Buy a Leasehold Property

Before exchanging on a leasehold flat in London, make sure you (or your solicitor) have reviewed and understood:

1. Lease length: How many years remain? Is it above 85 years? If not, get a lease extension cost estimate before you commit.
2. Ground rent: What is the current ground rent and how does it escalate?
3. Service charges: What were the service charges for the last three years? Request the accounts.
4. Major works: Are any major works planned? Request the minutes of the last three residents' or management company meetings.
5. Management: Who manages the building? Are there outstanding disputes? Are the communal areas in good condition?
6. Lease restrictions: Are there restrictions on subletting, pets, alterations, or running a business from the property?
7. Building insurance: Who insures the building? Is the sum insured adequate?