With freehold you own the building and its land outright, forever. With leasehold you own the right to live in a property for a fixed number of years, while someone else owns the building. Share of freehold sits in between: you hold a lease, but you and the other flat owners also own the freehold together. In London almost every flat is leasehold or share of freehold, and most houses are freehold.
This guide compares the three for London buyers: what you own, what it costs, how it affects your mortgage and resale, and what the leasehold reforms change. New to buying? Start with our step-by-step buying guide.
Leasehold vs share of freehold vs freehold at a glance
| Leasehold | Share of freehold | Freehold | |
|---|---|---|---|
| What you own | A lease for a fixed term (often 99 or 125 years) | A lease plus a share of the company that owns the building | The building and land, with no time limit |
| Typical London property | Flats in purpose-built blocks, new builds | Flats in converted houses and small blocks | Houses |
| Ground rent | Often, unless the lease started after 30 June 2022 | Usually none or nominal | None |
| Service charge | Yes, set by the freeholder or managing agent | Yes, set by the owners together | None, but some new-build estates charge an estate fee |
| Permission for alterations | Usually needed from the freeholder | Agreed between owners | Only planning and building rules |
| Lease extension | Statutory right, at a cost | Owners can grant themselves 999 years cheaply | Not applicable |
| Effect on mortgage | Depends on years left (lenders often want 80+) | Lent on as leasehold, but long lease makes it easy | Straightforward |
For the full definitions, see what is freehold property and leasehold explained.
Why are most London flats leasehold?
English law makes it hard to own a single flat as a freehold, because the owner of one floor cannot easily be forced to repair the roof or foundations that protect another. Leases solve this by putting one landlord in charge of the structure and setting out who pays for what. That is why London’s purpose-built blocks, mansion flats and conversions are almost all leasehold, and why a new-build flat in London is very rarely sold freehold.
The alternative, commonhold, has existed since 2002 but is still rare. The government plans to make it the standard for new flats (see the reforms section below).
If you are comparing areas, our area guides for Islington, King’s Cross and Clerkenwell cover the housing stock in each, from Georgian conversions (often share of freehold) to new-build blocks (leasehold).
Leasehold vs share of freehold: which is better?
For most flat buyers, share of freehold is the better position, because you control the two things that make leasehold expensive: the lease length and the service charge.
- Lease length. Owners can grant each other 999-year leases for little more than legal fees, which removes the shrinking-lease problem.
- Ground rent. Usually waived, since you would be paying it to yourselves.
- Service charge and works. Decided by the owners together, not by an outside landlord.
The trade-offs are real. You must agree with your neighbours on repairs and costs, someone has to run the freehold company and its accounts, and a disagreement can stall a sale. Before you buy a share of freehold flat, ask your solicitor for the company documents, the share certificate and confirmation that every lease has been extended or can be.
Already own a leasehold flat? You and your neighbours can buy the freehold together if at least half of the flats take part. Our freehold guide explains how.
Are leasehold properties cheaper than freehold?
On a like-for-like basis, a leasehold flat with a long lease and low ground rent sells for close to the same as a share of freehold flat. The big price gaps you see quoted come from comparing flats with houses. What does lower a leasehold flat’s value is:
- A short lease. Once a lease falls below 80 years, extending it costs more and buyers and lenders get cautious.
- High or rising ground rent. Especially doubling clauses in older leases.
- A high service charge or planned major works. Ask for the last three years of accounts and the reserve fund balance.
For a figure on a specific flat, get an instant valuation:
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How much could your property sell for?
Enter the postcode and answer four quick questions. We'll estimate the sale price from Land Registry sales nearby, and the rent it could earn if you let it instead.
- Land Registry sales data
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Remember the other costs of buying: stamp duty applies at the same rates whatever the tenure, and our guide to the cost of moving lists the rest.
How tenure affects your mortgage
Lenders lend on freehold houses and long-lease flats on the same terms. The risk is a short lease: many lenders want at least 80 years left at the start of the mortgage, or enough that the lease outlasts the mortgage term by 30 to 40 years, and some will not lend below 70 years. A lender may also query a high ground rent or a flying freehold.
See where rates are today:
Bank of England data · updated monthly
UK mortgage rates chart
Average quoted rates each month, latest figures for September 2026.
- 2-year fixed 5.13% ▲ 0.94 pts on a year ago
- 5-year fixed 4.98% ▲ 0.82 pts on a year ago
- Standard variable rate 6.58% ▼ 0.22 pts on a year ago
- Bank Rate 3.75% ▼ 0.25 pts on a year ago
UK mortgage rates by year, 1975–2026 (yearly averages)
| Year | 2-year fixed | 5-year fixed | Standard variable rate | Bank Rate |
|---|---|---|---|---|
| 2026 (Jan–Sep) | 4.67% | 4.56% | 6.59% | 3.75% |
| 2025 | 4.29% | 4.20% | 7.03% | 4.25% |
| 2024 | 4.81% | 4.40% | 7.85% | 5.11% |
| 2023 | 5.31% | 4.81% | 7.53% | 4.68% |
| 2022 | 3.51% | 3.38% | 4.71% | 1.46% |
| 2021 | 1.45% | 1.58% | 3.61% | 0.11% |
| 2020 | 1.58% | 1.80% | 3.79% | 0.23% |
| 2019 | 1.59% | 1.90% | 4.31% | 0.75% |
| 2018 | 1.69% | 2.02% | 4.26% | 0.60% |
| 2017 | 1.46% | 2.06% | 4.38% | 0.29% |
| 2016 | 1.72% | 2.50% | 4.44% | 0.40% |
| 2015 | 1.92% | 2.88% | 4.51% | 0.50% |
| 2014 | 2.40% | 3.52% | 4.45% | 0.50% |
| 2013 | 2.68% | 3.47% | 4.37% | 0.50% |
| 2012 | 3.54% | 4.13% | 4.22% | 0.50% |
| 2011 | 3.34% | 4.64% | 4.08% | 0.50% |
| 2010 | 3.76% | 5.21% | 3.96% | 0.50% |
| 2009 | 4.24% | 5.36% | 4.05% | 0.65% |
| 2008 | 5.88% | 5.88% | 6.90% | 4.68% |
| 2007 | 5.84% | 5.99% | 7.44% | 5.51% |
| 2006 | 4.95% | 5.25% | 6.51% | 4.64% |
| 2005 | 4.82% | 5.02% | 6.53% | 4.65% |
| 2004 | 5.19% | 5.60% | 6.15% | 4.38% |
| 2003 | 4.37% | 4.92% | 5.47% | 3.69% |
| 2002 | 4.96% | 5.49% | 5.66% | 4.00% |
| 2001 | 5.49% | 5.84% | 6.81% | 5.12% |
| 2000 | 6.36% | 6.79% | 7.55% | 5.97% |
| 1999 | 6.06% | 6.33% | 6.92% | 5.35% |
| 1998 | 7.01% | 6.86% | 8.62% | 7.23% |
| 1997 | 7.16% | 7.84% | 7.78% | 6.54% |
| 1996 | 6.91% | 8.04% | 7.19% | 5.89% |
| 1995 | 8.07% | 8.90% | 8.25% | 6.57% |
| 1994 | – | – | – | 5.34% |
| 1993 | – | – | – | 5.89% |
| 1992 | – | – | – | 9.43% |
| 1991 | – | – | – | 11.57% |
| 1990 | – | – | – | 14.65% |
| 1989 | – | – | – | 13.67% |
| 1988 | – | – | – | 9.94% |
| 1987 | – | – | – | 9.60% |
| 1986 | – | – | – | 10.77% |
| 1985 | – | – | – | 12.10% |
| 1984 | – | – | – | 9.66% |
| 1983 | – | – | – | 9.86% |
| 1982 | – | – | – | 11.96% |
| 1981 | – | – | – | 13.17% |
| 1980 | – | – | – | 16.31% |
| 1979 | – | – | – | 13.76% |
| 1978 | – | – | – | 9.12% |
| 1977 | – | – | – | 8.46% |
| 1976 | – | – | – | 11.73% |
| 1975 | – | – | – | 10.80% |
Source: Bank of England Database (IUMBV34, IUMBV42, IUMTLMV, IUMABEDR). Monthly averages of quoted rates; fixed rates are for 75% loan-to-value mortgages. Mortgage rate series start in 1995. For information only, not financial advice.
And check what you could borrow, whether you are buying a home or a buy-to-let:
Mortgage capacity calculator
How much could you borrow?
Buy-to-let lenders work from the rent. For a home to live in they work from your income. Enter a figure to see the loan, the price and a PDF you can keep.
Mortgage capacity calculator
How much could you borrow?
On a buy-to-let, lenders work from the rent. On a home to live in, they work from your income. See both.
The rent decides how much you can borrow. Find out what your property would let for.
Might you let the property one day? Find out what it would rent for.
Or book a callA guide only. It isn't a mortgage offer or financial advice, and Cozee is a letting agent, not a mortgage broker or lender. Every lender has its own rules and also looks at your credit record, age, spending and other properties, so speak to a mortgage broker before you make an offer. The figures leave out stamp duty, legal and lender fees. Sources: Bank of England rules for buy-to-let lending (SS13/16), GOV.UK stamp duty rates.
How much you can borrow: common questions
How much can I borrow on a buy-to-let mortgage?
Lenders work mainly from the rent, not your salary. The rent usually has to cover 125% of the mortgage interest if you pay basic-rate tax, 145% if you pay higher-rate tax and 125% if you buy through a limited company. The interest is worked out at a test rate that is higher than the rate you pay. Most lenders also lend no more than 75% of the property's value, so you need a deposit of at least 25%.
What is an interest cover ratio (ICR)?
It is the rent as a share of the mortgage interest. With a cover of 145% and a test rate of 7%, a £250,000 loan needs a rent of about £2,115 a month.
Why can I borrow more with a five-year fix?
Bank of England rules ask lenders to test a buy-to-let loan at the rate plus 2 percentage points, and at no less than 5.5%. A rate fixed for five years or more is exempt, so most lenders test it at or near the rate you actually pay. A lower test rate means the same rent supports a bigger loan.
Can I borrow more through a limited company?
Often, if you pay higher-rate tax. A company deducts all its mortgage interest before tax, so lenders usually ask for 125% cover, not 145%. Company mortgage rates and fees are usually higher, though, and moving a property you already own into a company can mean stamp duty and capital gains tax.
How much can I borrow for a home to live in?
Most lenders lend up to about 4.5 times your household income before tax. Some go up to 5.5 times for higher earners, and they lend less if you have loans, credit cards or childcare to pay. They also look at your spending and your credit record.
How much deposit do I need?
For a home to live in, at least 5% of the price, and rates are lower with 10% or more. For a buy-to-let, most lenders ask for at least 25%. Stamp duty and legal fees come on top of the deposit.
A guide only. It isn't a mortgage offer or financial advice, and Cozee is a letting agent, not a mortgage broker or lender. Every lender has its own rules and also looks at your credit record, age, spending and other properties, so speak to a mortgage broker before you make an offer. The figures leave out stamp duty, legal and lender fees.
For more on rates over time, see our mortgage rates chart.
What the leasehold reforms change
Leasehold law in England and Wales is mid-reform. What matters for buyers today:
| Change | Status [confirm on publication] |
|---|---|
| Ground rent on new long residential leases set to zero (Leasehold Reform (Ground Rent) Act 2022) | In force since 30 June 2022 |
| No need to own for two years before extending a lease or buying the freehold (Leasehold and Freehold Reform Act 2024) | In force since 31 January 2025 |
| Standard lease extension up to 990 years and abolition of marriage value (2024 Act) | Passed, not yet in force |
| Ground rent on older leases capped at £250 a year, falling to zero after a transition (draft Commonhold and Leasehold Reform Bill, January 2026) | Draft, not yet law |
| New leasehold flats banned in favour of commonhold (same draft bill) | Draft, not yet law |
In short: buying a leasehold flat now is safer than it was, but a short lease still costs real money to extend until the new valuation rules commence. The House of Commons Library briefing tracks progress.
How to check if a property is leasehold or freehold
The estate agent must state the tenure on the listing, along with the lease length, ground rent and service charge. To confirm it, search the HM Land Registry title register for £7; our guide to using HM Land Registry shows how. Your conveyancing solicitor will check the lease in full before exchange, and our list of questions to ask at a viewing includes the tenure questions to raise early.
Buying to let: does tenure matter?
Most London buy-to-let flats are leasehold, and that works well as long as the lease is long and the lease allows letting (some restrict short lets or require the freeholder’s consent). Service charge and ground rent come straight off your yield, so build them into your numbers with our rental yield guide, then check what the flat would rent for:
Free rental valuation
How much rent could your property earn?
Enter the postcode and answer four quick questions. We'll estimate the monthly rent from official ONS figures and the rents we achieve for landlords nearby.
- Official ONS rent data
- Calibrated on real Cozee lets
- Free, in under a minute
Every rented home also needs a valid EPC at E or above, whatever the tenure:
Free EPC check
Check any property's EPC rating
Search the official government EPC register and get a free report showing the rating, running costs and the improvements that would lift it.
- Official government register data
- Free, in under a minute
- Downloadable report
Buying from abroad? Read our guide to investing in UK property, then see how Cozee lets and manages London property for overseas landlords. For tax and licensing, see tax on rental income and our property licensing guide.
Frequently asked questions
Freehold means you own the property and its land outright with no time limit. Leasehold means you own the right to live in the property for a fixed term, and someone else owns the building.
Yes. Almost all London flats are leasehold or share of freehold. Freehold is mostly limited to houses.
Usually, because the flat owners control the lease length, ground rent and service charge. The downside is that decisions need agreement between neighbours.
Not like for like. A long-lease flat is priced close to a share of freehold one; short leases, high ground rent and high service charges are what lower the value.
Many want at least 80 years remaining, and some will not lend below 70. Check with a broker before you offer on a short lease.
Yes, together with other flat owners, as long as at least half of the flats in the building take part and the building qualifies.
Not for existing homes. A draft bill published in January 2026 proposes ending new leasehold flats and capping ground rent on existing leases, but it is not yet law.
Last Updated on October 9, 2026