Freehold is the most complete form of property ownership in England and Wales. When you buy a freehold property, you own the building and the land beneath it indefinitely. There is no landlord above you, no lease to expire, and no ground rent or service charges payable to a freeholder (though you may still have estate management charges in some developments).
Most houses in England and Wales are sold as freehold. Flats are more commonly leasehold, although recent reforms have made it easier for leaseholders to purchase the freehold (known as enfranchisement) or to buy a share of freehold collectively with other flat owners.
From a mortgage perspective, freehold properties are generally more straightforward to finance than leasehold ones. Lenders do not need to consider lease length, ground rent escalation clauses or service charge levels, which simplifies the valuation and legal process.
In Scotland, the equivalent concept is outright ownership, as the feudal system (which was similar to leasehold) was abolished in 2004.
Helen buys a three-bedroom detached house on a freehold basis for £320,000. She owns the house and the garden land outright. She does not pay ground rent or answer to a landlord. When she remortgages five years later, the process is straightforward because there is no lease to check and no freeholder's consent required.
Key Points
- Freehold means you own the building and the land with no time limit
- Most houses are freehold; most flats are leasehold
- Freeholders do not pay ground rent or service charges to a superior landlord
- Freehold properties are simpler and cheaper to mortgage than leasehold ones
- Leaseholders can sometimes purchase the freehold through enfranchisement