Leasehold, Freehold, Commonhold: What’s the Difference?

Big changes could be coming to the UK’s leasehold, freehold, and commonhold systems from 2025 onwards, which could impact property owners and landlords alike.

The form of home ownership (or form of tenure) you have can affect everything from maintenance responsibilities to long-term costs, so it’s worth getting to grips with the basics.

In this guide, we’ll break all these terms down in plain English so you know exactly what to expect and can avoid any unpleasant surprises.

1. What is freehold?
2. What is leasehold?
3. What is commonhold?

What is freehold?

Freehold means you own a property and the land it’s built on (within the title plan), with no end date to your ownership. It’s considered the most common way to buy a house in the UK.

The main types of freehold properties include freehold houses, freehold flats, and flying freeholds.

Freehold houses

Houses are typically sold as freehold. If you own a freehold house, you usually:

• own both the property and the land it stands on
• are responsible for organising and covering maintenance costs
• need to arrange building and contents insurance
• don’t have to pay ground rent
• only pay maintenance charges if your home shares services with neighbours, such as private roads on an estate
• can make alterations to the property, as long as you have any necessary planning permission and comply with building regulations

Freehold flats

If you own a flat, you might also own a share of the freehold for the building it’s in.

If you don’t already own a share, you may be able to join forces with other leaseholders to buy the freehold – a process known as leasehold enfranchisement or collective enfranchisement.

Some benefits of owning a share of the freehold include:

• there is no separate freeholder or landlord to deal with
• you don’t have to pay ground rent
• the management company (often made up of the flat owners) controls the lease lengths and can extend them
• the management company decides about repairs and maintenance
• the flat-owners will not have to pay ground rent

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Flying freeholds

A flying freehold is a part of a property that is above or below another property, where each part is owned under different freehold titles.

For example, it could be a balcony that hangs over someone else’s property or a unit above a shared area, like a passageway or garage.

Another example is a cellar that extends under a neighbour’s property or in a terraced or semi-detached house where the boundary line doesn’t go down the middle, so part of one owner’s bedroom is directly above a neighbour’s lounge.

What is leasehold?

As a landlord, owning a leasehold property means you own the building or flat for a fixed number of years, but not the land it sits on.

The land is owned by a freeholder, and you, as the leaseholder, have the right to use and let out the property for the duration of the lease.

Leasehold properties are often flats, though houses can also be leasehold. When you own a leasehold property, you’re typically required to pay ground rent to the freeholder, as well as service charges for the maintenance of communal areas, like shared hallways, lifts, or gardens.

The length of the lease can be important; as the lease gets shorter, the property may become harder to sell, and its value can decrease. It’s also possible to extend the lease, but this can come with costs and legal processes.

Last but not least, lease agreements may include restrictions on what alterations can be made to the property, which could impact how you manage the space.

Will leasehold be abolished in the UK?

No, leasehold isn’t being abolished in the whole of the UK. The Leasehold and Freehold Reform Act will prohibit the sale of new leasehold houses in England and Wales, except in exceptional circumstances.

The government has also announced plans to phase out leasehold for all new flats through a new bill, the Leasehold and Commonhold Bill.

What is commonhold?

Commonhold is a type of property ownership designed for multi-occupancy developments, such as blocks of flats.

Each unit owner holds the freehold to their own property, while a commonhold or residents’ association manages and oversees the shared areas of the building.

Introduced in 2002, commonhold was intended to give flat owners more control over their building than the leasehold system.

However, despite its potential benefits, very few commonholds have been established since its introduction.

In March 2025, the government released the Commonhold White Paper, outlining plans to “reinvigorate” commonhold by reforming the legal framework, aiming to make it a preferred and practical alternative to leasehold.

A consultation is also expected later in 2025 to determine the best approach for phasing out leasehold flats, with a new draft Leasehold and Commonhold Bill set to be published by the end of the year.

Is commonhold better than leasehold?

Whether commonhold is better than leasehold really depends on what you value most as a property owner.

With commonhold, flat owners get to own the freehold of their property and manage shared spaces through a residents’ association. There’s no ground rent or fixed lease term, and decisions are made together by the owners, which gives more control. However, it’s still quite rare in the UK, with only a few commonholds set up since it was introduced.

One reason for this is that leasehold has been more appealing to developers and investors because it generates income from ground rents. Plus, moving from leasehold to commonhold can be tricky – getting everyone’s approval, including leaseholders, freeholders, and mortgage lenders, is tough, particularly in larger buildings.

Leasehold, meanwhile, is far more common, especially for flats. It’s easier to finance, and the legal system is well-established. But it does come with ongoing costs, like ground rent (abolished for new leases granted after 30th June 2022) and service charges, and the property’s value can drop as the lease shortens.

So, in short, commonhold gives more control and avoids some issues with leasehold, but leasehold is still easier to finance and more widely accepted.

Which one is better really comes down to your priorities and the specific property you’re looking at.

As mentioned earlier, the government’s plans to reform the legal framework for commonholds are in motion, so it’ll be interesting to see what changes come about.

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