Conveyancing

Leasehold vs Freehold: What's the Difference?

4 min read · Last reviewed 1 June 2026

In brief

  • →Freehold: you own the property and the land outright, indefinitely
  • →Leasehold: you own the right to occupy for the term of the lease, subject to conditions
  • →Most flats in Manchester are leasehold; most houses are freehold
  • →Short leases (under 80 years) are problematic — they affect mortgage eligibility and resale value
  • →Service charges and ground rent are the two biggest ongoing costs of leasehold ownership

When you buy a property in the UK, you buy it in one of two ways: freehold or leasehold. The distinction matters enormously — for your rights, your costs, and the value of what you're buying.

Freehold

When you buy a freehold property, you own both the building and the land it stands on, outright and indefinitely. There's no time limit on your ownership. No ground rent. No freeholder above you. No service charges unless there's a communal area shared with neighbours under a specific arrangement.

Most freehold properties are houses. The vast majority of terraced houses, semis, and detached houses in Greater Manchester are freehold.

What you're responsible for: everything. All maintenance and repair of the building is down to you. There's no managing agent. The advantage is control; the disadvantage is that there's no one else to share the cost of a new roof.

Leasehold

When you buy a leasehold property, you buy the right to occupy the property for the duration of the lease — which could be 99 years, 125 years, 250 years, or even 999 years remaining.

The freeholder continues to own the building and the land. You pay:

  • Ground rent (in older leases with rent > peppercorn): a regular payment to the freeholder
  • Service charge: your share of the cost of maintaining, insuring, and managing the building

Most flats are leasehold. This is the dominant ownership model for purpose-built and converted flats across Manchester, including in Ancoats, the city centre, and South Manchester.

What to check before buying leasehold

1. Lease length

The most important number. The longer the remaining term, the better.

  • 125+ years remaining: Excellent. No short-term concern.
  • 90–124 years remaining: Fine for now but worth understanding the timeline for extension.
  • 80–89 years remaining: Getting close to the threshold. Extending before it drops below 80 is strongly advisable.
  • Under 80 years remaining: Significant problem. The premium for extension jumps substantially once the lease drops below 80 years (the "marriage value" kicks in). Many lenders won't lend below 80 years, and some require minimum 85 years.
  • Under 70 years: Most mortgage lenders won't lend at all.

If you're looking at a property with fewer than 85 years on the lease, factor in the cost and time of extending before you make an offer. Your solicitor can advise.

2. Ground rent

Following the Leasehold Reform (Ground Rent) Act 2022, new leases in England must have a peppercorn (zero) ground rent. Legacy leases — anything created before 30 June 2022 — may still have significant ground rent.

The red flag is a doubling clause — where the ground rent doubles every 10–25 years. This can make the property unmortgageable after a few cycles. Your solicitor will review the lease and flag this.

3. Service charges

Service charges fund the maintenance, insurance, and management of the building. For a well-run building, this is reasonable value. For a poorly managed one, it can be a significant ongoing cost.

Ask the seller for the last three years of service charge accounts. Look for:

  • How much was charged per year
  • Was the charge stable or increasing rapidly?
  • Is there a reserve (sinking) fund, and how much is in it?
  • Are there any major works planned (roof, lift, external decoration)?

A building with a thin reserve fund and a major works project pending is a financial risk.

4. The managing agent

The managing agent runs the building day to day. A good one means well-maintained communal areas, prompt repairs, and transparent accounts. A bad one means disputes, deferred maintenance, and inflated costs.

Ask current residents about their experience with the managing agent. Check Google reviews for the management company. Ask for a copy of recent communications about the building.

The Leasehold Reform Act 2024

The Leasehold and Freehold Reform Act 2024 introduced significant changes to protect leaseholders. Key measures include:

  • Making it easier and cheaper to extend leases
  • Strengthening rights to challenge service charge bills
  • Improving transparency from managing agents
  • Removal of two-year waiting period before leaseholders can extend

The legislation is being implemented in stages. Your solicitor can advise on how current rules apply to a specific property.

This guide is information only. Dom does not provide financial, mortgage or legal advice. Always consult a qualified adviser for decisions specific to your circumstances.

Frequently asked questions

Not inherently. Most city-centre flats in Manchester are leasehold, and millions of people buy and live in leasehold properties without problems. The key is checking the right things before you buy: lease length, ground rent terms, service charges, and the managing agent's track record.

Ground rent is a regular payment made by a leaseholder to the freeholder. Following the Leasehold Reform (Ground Rent) Act 2022, new leases cannot charge more than a peppercorn ground rent. Existing leases may have higher ground rent, and some have escalating (doubling) clauses — which can be problematic for mortgage eligibility.

Technically, ownership of the property reverts to the freeholder when the lease expires. In practice, most leaseholders extend their lease long before this happens. If a lease gets below 80 years, it becomes costly to extend and harder to mortgage. Below 70 years, most lenders won't lend at all.

Yes. Under the Leasehold Reform Act, qualifying leaseholders have the right to extend their lease by 90 years. The cost depends on the property value, the ground rent, and how many years remain. It's best done sooner rather than later — the closer you get to 80 years remaining, the more expensive the extension becomes.

Some leasehold flat owners collectively own the freehold company of their building — they own shares in a company that owns the freehold. This gives them more control over service charges, managing agents, and maintenance decisions. It also makes extending their lease much simpler and cheaper. It's generally a better situation than an absent commercial freeholder.

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