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Throwback Thursday: What is the difference between leasehold, freehold & share of freehold

13 Nov 2013

As estate agents we're used to throwing around all sorts of "jargon" related to buying and selling property because we do it day in and day out, but we're conscious of the fact that some buyers, particularly first time buyers, won’t be as familiar with terms like “freehold”, “leasehold” and “share of freehold”.  

Many sellers may want to know more about how the tenure of their home affects its value.

This handy guide will help you get your head around the differences in “tenure” on a property and help you figure out how it impacts you. 

Freehold Property

When you purchase a freehold property, you own the home, the land it is built on, and you will have the right to live there for as long as you please. Houses are most often freehold properties.  Flats on the other hand, are more commonly leasehold or share of freehold. 


Freehold properties like this 3 bedroom house for sale in Royal Gardens, W7 mean that with the correct planning permissions there is a possibility of extending your living space

If you own the freehold you can make changes to the property provided that you have the relevant planning permissions.  Particularly with listed buildings (old buildings) you may need special permission to make structural changes.

Leasehold Property

When you purchase a leasehold property you are actually buying the rights to live in a property for a set period of time. You do not actually own the property, nor the land on which it is built. Most flats are leasehold.  As part of the terms of the lease, it means you are obligated to pay ground rent to the freeholder. The ground rent and/or the service charge will cover the costs for communal maintenance repairs. The lease should stipulate how the service charge is worked out, and how it is divided between the other leaseholders. It’s important to calculate all these costs before committing to a leasehold property, as you may not have budgeted for the additional costs.  Your estate agent should be able to provide these details.

Brunswick Road two bedroom flat as example ofa leasehold property

When buying a leasehold property like this two bedroom apartment in Brunswick Road, W5 make sure to budget for ground rent and service charges

Once the stipulated period in the lease expires, the ownership of the property is given back to the Freeholder. Most leases are initially set for a 99 year period.  If the lease period is quite short, you can get an extension. 

For more information about lease extensions, click here to see Northfields free Guide to Lease Extensions

When buying or selling a leasehold property, it is important to find out how long the lease is, as it will affect the value of the property.  If you are thinking of selling your property and need advice about how your lease will affect the value, click the link to request a free valuation or ask us a question via Twitter @northfieldslive or even speak directly to our Managing Director via Twitter @nickdevonport.  We have a Facebook page too, so you can ask us for free advice whenever and however you are comfortable.  

So why do people buy leasehold properties? Well, because most flats are leasehold, these properties are more affordable.  Plus, it means everyone living within the same building has to split maintenance costs in respect of the common parts of the building and the communal areas.  For that reason, if you have less time and inclination to look after outdoor spaces, a leasehold property with communal gardens may be a tremendous advantage.

Share of Freehold

Another possible type of property tenure on a flat is Share of Freehold.  In this case, the title (i.e. ownership of the flat) will be leasehold and, in addition, you would own a share of the freehold title to the whole building. This way, you and your neighbours would jointly be the freeholder, with hopefully the same desire to look after the common parts of the building.

Beechcroft 2 bed garden flat for sale in Ealing

Share of freehold flats mean that you and the other residents contribute to the maintenance of communal areas

There are two main ways in which shared ownership of the freehold can be set up. The first, where a house has been converted into, say, two flats, is for the two flat owners to buy the freehold in their personal names and then whenever either flat is sold, they both have to transfer the title to the continuing owner and the new owner.

The more common method is for the freehold to be owned by a limited company in which each flat owner has a share. When a flat is sold, their share is transferred to the new flat owner, and a new share certificate is issued. 

Still have questions?

If you would like to know more about how the tenure on your property would affect the value, feel free to give us a call on 020 8740 6622, email us on [email protected] or contact us via our Facebook page or via Twitter @northfieldslive for some free advice.