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Key characteristics of freehold ownership

Outright ownership

When you own a freehold property, you have outright ownership of both the building and the land on which it sits.
This means there is no expiration date on your ownership, allowing you to retain the property indefinitely unless you decide to sell it.
Unlike leasehold, where you own the property but not the land, freehold means outright ownership of both the land and the building above it.
This indefinite period of ownership allows for long-term planning, making freehold tenure an attractive option for family offices and high-net-worth individuals seeking stable, long-term investments.
Your ownership rights are not restricted by a lease term or a leasehold expiry date, giving you full control over how and when you use or dispose of the property.
Most buildings in the UK are sold as freehold properties, offering owners greater long-term security.
You can confirm how a property is held by checking its freehold title through the Land Registry website.

Legal rights and responsibilities

While freehold tenure offers considerable advantages, it also comes with certain responsibilities. These legal rights and freeholder responsibilities go hand in hand.
As the freehold owner, you are solely responsible for maintaining the property, including the exterior walls, roof, and any communal areas if applicable.
This responsibility extends to buildings insurance, ensuring the property is adequately protected against potential risks.

Maintenance and repairs: Unlike leasehold properties, where the landlord or a management company is often responsible for maintaining communal areas and exterior walls, freehold ownership places the burden of maintenance directly on the owner.
This includes routine upkeep, repairs, and any necessary building works. While this may require a higher level of involvement, it also allows for complete control over the property's condition and appearance.
There are no legal restrictions on carrying out property maintenance when you see fit, which gives freeholders more flexibility.

Building insurance: As a freeholder, you must arrange buildings insurance to cover the cost of repairs or rebuilding in the event of damage.
This differs from leasehold tenure, where the landlord typically arranges the insurance and passes the cost on to leaseholders through service charges.
Having control over your own insurance policy can be advantageous, as it allows you to tailor the coverage to suit your specific needs.
In many cases your insurance policy will sit alongside other protections required by mortgage lenders, who want to see that both the property and the land are adequately insured.

No ground rent or service charges

Unlike leasehold properties, freehold tenure does not require paying ground rent or annual service charges.
This can result in significant savings over time. Leaseholders often face additional costs including ground rent reviews and service charge increases, none of which apply to freehold ownership.
However, as an owner you must budget for maintenance fees and building works, as you are solely responsible for the upkeep of your property.

Comparing leasehold and freehold tenure

Leasehold properties

Leasehold means that you own the property for a set number of years, decades, or even centuries, depending on the lease's length.
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A lease agreement sets out the terms of this ownership for a fixed term, which could be anything from 40 to 999 years.
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Leaseholders must pay ground rent and may be subject to service charges and maintenance fees. If it's a short lease, when it expires, ownership of the property reverts to the freeholder.
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The number of years remaining on the lease has a direct impact on the property's value and how easy it is to sell or remortgage.
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Leaseholders may face restrictions on how they can use their property and must obtain permission from the freeholder to make significant alterations.
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Lease extensions and enfranchisement: Leaseholders can face additional costs and legal processes if they wish to extend their lease or purchase the freehold - a process known as enfranchisement.
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A lease extension grants the leaseholder a new lease with a longer lease term, and under current law the standard extension adds 90 years for flats.
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Where the remaining lease term drops below 80 years, leaseholders may also need to pay marriage value, a sum based on the increase in the property's worth once the longer lease is in place.

These procedures can be complex, time-consuming, and expensive, often involving negotiations with the freeholder and possibly legal action if an agreement cannot be reached.

Freehold properties

Freehold tenure offers more freedom and control over the property.

There is no need to pay ground rent, and owners are not subject to the same restrictions as leaseholders.

This type of tenure is particularly advantageous for those looking to buy a property as a long-term investment, giving you more control to develop the property.

Freehold owners are also free to apply for shared ownership arrangements or let out the property without seeking a landlord's consent.

Commonhold properties

Another tenure type worth mentioning is commonhold, which is often used for buildings divided into multiple flats.

In a commonhold association, each flat owner possesses a share of the freehold and is responsible for communal areas through a commonhold association.

This structure eliminates the need for a traditional leasehold contract with a freeholder and provides more autonomy to the individual flat owners.
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Commonhold properties are designed to sit somewhere between freehold and leasehold, combining elements of shared ownership of the building with clearer rules around management company decisions and property maintenance.

Practical considerations

Mortgage lenders

Freehold properties are often viewed as more stable investments, and mortgage terms can be more favourable compared to leasehold properties with short leases.
Mortgage lenders may apply stricter criteria where a leasehold property has only a few years remaining on the lease term, which is one reason why tenure freehold can be attractive for buyers looking for long term security.
Where a property includes a flying freehold element (for example where part of the building extends over a neighbour’s land), some lenders may ask for extra information or legal protections before agreeing to lend.

Land registry and title absolute

When purchasing a freehold property, the transaction is registered with the Land Registry, providing the buyer with a title absolute.
This legal document confirms the buyer's ownership of the property and the land.
Details of most freehold and leasehold properties in England and Wales can be checked on the Land Registry website, which shows who owns the freehold title and any legal restrictions affecting the land.
Having title absolute recorded at the Land Registry gives clear evidence of ownership of the property and the land, and helps future buyers and mortgage lenders verify the position.

Maintenance and major works

As a freehold property owner, you must plan for maintenance and major works. Unlike leaseholders, who may pay for these through service charges, freeholders must manage these expenses independently.
Regular upkeep is essential to maintain the property's value.
Budgeting for property maintenance, including exterior walls, roofs and any shared driveways or accessways, is therefore a key part of owning land outright.
Freehold owners in larger developments may still decide to appoint a management company to coordinate maintaining communal areas, but ultimate responsibility rests with the freehold owners themselves.

Frequently asked questions (FAQs)

What is the main benefit of owning a freehold property?

The primary benefit of freehold ownership is the full, outright ownership of both the property and the land, offering greater control, security, and freedom compared to leasehold properties.
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You are not subject to a lease expiry date, ground rent, or service charges, and you have complete autonomy over structural alterations, subject to planning permission.
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For many buyers, this means complete control over ownership of the property in the long term, without worrying about a fixed term or having to negotiate a new lease in future.

Unlike leasehold, there is no risk that the property reverts to a landlord at the end of the lease term, and you are less exposed to additional costs linked to lease extensions or changing ground rent rules.

Do I need to pay any ongoing fees for a freehold property?

While freehold ownership does not involve paying ground rent or service charges to a landlord, you are responsible for maintenance, repairs, and buildings insurance. 

These costs are ongoing but are typically less burdensome than the combined expenses associated with leasehold tenure.

Can I convert a leasehold property to freehold?

Yes, it is possible to convert a leasehold property to freehold through a process called enfranchisement.
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This involves purchasing the freehold from the current freeholder, which can be a complex and costly process.
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The cost will depend on factors such as the length of the remaining lease, the property's value, and negotiations with the freeholder.

The process is governed by the Leasehold Reform, Housing and Urban Development Act 1993, and recent reforms aim to make it cheaper by removing the requirement to pay marriage value.

What are the legal responsibilities of a freeholder?

As a freehold owner, you are responsible for the upkeep of the property, including maintaining the exterior walls, roof, and any communal areas.

You must also ensure that the property is adequately insured through building insurance.

Additionally, any building works or structural alterations must comply with local planning and building regulations.

How does freehold tenure affect planning permission?

Freehold owners often have greater freedom to apply for planning permission for modifications, without needing to seek approval from a landlord or management company.

There are still legal restrictions under local planning rules, but you will not need a freeholder's consent on top of those requirements.

How does freehold tenure affect property value?

Freehold properties often hold their value better than leasehold properties, particularly as there is no diminishing lease term to consider.

Freehold tenure is generally more attractive to buyers, providing an added layer of security and fewer complications in terms of ongoing costs and legal obligations.

Leasehold properties, by contrast, can lose considerable value as the number of years remaining on the lease decreases, particularly once the lease drops below 80 years.

An attractive option

Understanding the nuances between freehold and leasehold tenure is crucial when considering property ownership in the UK.
Freehold tenure provides greater control, fewer ongoing costs, and long-term security, making it an attractive option for high net worth individuals seeking to invest in property.
If you are weighing up your options, seeking advice from a specialist can help you make the right decision for your circumstances.
Maritime Capital specialise in guiding family offices and private clients through the complexities of the property market.
Get in touch to learn how we can assist you with your property investment needs.

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