The two main forms of property ownership in England and Wales: freehold means owning the property and land outright indefinitely; leasehold means owning the right to occupy for a fixed term.
English property law distinguishes between two fundamental ownership types. A freeholder owns the property and the land beneath it forever. There is no superior landlord and no end date to the ownership. Most houses in England and Wales are sold freehold.
A leaseholder owns the right to occupy a property for a fixed period — the lease term — which can range from a few decades to 999 years. The land and often the building structure are owned by the freeholder (landlord). Most flats are sold leasehold.
Leaseholders pay ground rent to the freeholder and service charge for maintenance of shared areas. The Leasehold Reform (Ground Rent) Act 2022 banned ground rents on new residential leases in England and Wales, but existing leases can still have ground rent obligations.
A lease with less than 80 years remaining is considered short and significantly harder to mortgage and resell. The cost of extending a lease below 80 years rises sharply because the calculation includes a "marriage value" element. Buyers should always check the remaining lease term.
Leaseholders have statutory rights to extend their lease by 90 years (for flats) at a peppercorn ground rent, or to collectively buy the freehold (enfranchisement). The price is determined by a statutory formula and can be enforced through the First-tier Tribunal.
If you own a house on a long lease, the Leasehold Reform Act 1967 gives you the right to buy the freehold (enfranchisement). For flats, collective enfranchisement requires at least 50% of flat owners to participate.
Share of freehold means that the leaseholders collectively own the freehold company. It gives much greater control over service charges and maintenance decisions and makes lease extensions straightforward.
Commonhold is a third form of ownership introduced in 2002 where flat owners own their units outright and collectively manage the building through a commonhold association, with no superior landlord. It remains rare in practice.
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