If you’re buying a flat in London, you’ve almost certainly come across both terms. Leasehold. Share of freehold. They get used interchangeably in listings, thrown around in solicitor letters, and explained with varying degrees of accuracy by estate agents who may not fully understand the difference themselves. So let’s sort it out properly.
The distinction matters more than most buyers realise. It affects your rights over the property, your ability to extend your lease, how much it costs to do so, and what happens when you come to sell. Getting it wrong, or buying without understanding it, can be an expensive lesson.
This guide covers the key differences between leasehold and share of freehold, what each means for a London flat buyer, and why the type of ownership you hold has a direct bearing on the survey and valuation advice you’ll need before you exchange.
What Does Leasehold Actually Mean?
When you buy a leasehold property, you’re buying the right to occupy it for a fixed period of time — typically anywhere from 99 to 999 years, though many older London leases are considerably shorter. You own the property itself, but not the land it sits on or the building it’s part of. That belongs to the freeholder, also called the landlord.
The freeholder manages the building, organises maintenance and insurance, and collects service charges and ground rent from leaseholders. You pay those charges in addition to your mortgage. How much, how often, and how fairly depends entirely on the freeholder’s approach, which varies significantly.
In practice, the vast majority of flats in England and Wales are sold leasehold. It’s the default structure for apartment ownership. The problems arise not from the model itself but from how it can be mismanaged, and from short or diminishing lease lengths that create real financial risk for buyers.
What Is Considered a Short Lease?
A lease below 80 years is where buyers and mortgage lenders start to take notice. Once a lease drops below 80 years, the cost of extending it increases substantially because of a calculation called marriage value, which effectively means the freeholder is entitled to a share of the uplift in the property’s value once the extension is granted.
Many lenders will not offer a mortgage on a property with fewer than 70 years remaining. Some are stricter. If you’re buying a leasehold flat, the remaining lease term is one of the first things your chartered surveyor should flag, and it should be confirmed by your solicitor before you make an offer.
For an independent view on what to look for before buying a leasehold property, our guide to RICS Level 2 Homebuyer Reports, covers what a surveyor will assess and flag on a pre-purchase inspection.
What Is a Share of Freehold?
Share of freehold means the leaseholders in a building jointly own the freehold of that building. Rather than paying ground rent and service charges to an external landlord, the residents collectively control the property company or nominee purchaser that holds the freehold title.
In most cases, share of freehold properties still have individual leases. What changes is who holds the freehold. Instead of an absent landlord setting the service charges and deciding when the roof gets fixed, the leaseholders collectively make those decisions, usually through a residents’ management company.
It’s a structure common in smaller London conversions, typically Victorian or Edwardian houses divided into two, three or four flats. Each flat is sold leasehold, and each leaseholder also holds a share in the freehold company. You own your flat and, collectively, the building.
Share of Freehold Benefits for London Buyers
The practical advantages are meaningful. You can typically extend your lease to 999 years at minimal or nil ground rent, because you’re effectively granting the extension to yourself. This is a significant financial benefit, given how costly a standard leasehold extension can be when negotiating with an external freeholder.
Service charges tend to be more transparent and more fairly set. The residents decide how the building is managed and what’s spent on maintenance, rather than receiving bills from a management company acting in the freeholder’s interests. That doesn’t mean share of freehold is without complications, but they’re different complications.
The government’s official guidance on leasehold reform and the rights of leaseholders is published by His Majesty’s Government
Leasehold vs Share of Freehold: The Key Differences
Control Over the Building
A standard leaseholder has limited say in how the building is managed. They can raise concerns, challenge unreasonable service charges through a tribunal, and in some cases exercise the right to manage. But day to day, the freeholder runs the building. With share of freehold, the leaseholders collectively hold that control.
Ground Rent and Service Charges
Ground rent is a charge paid by leaseholders to the freeholder. Under the Leasehold Reform (Ground Rent) Act 2022, ground rent for new residential leases in England must now be zero. However, existing leases may still carry ground rent obligations, which vary from peppercorn amounts to escalating charges that can cause problems when selling or remortgaging.
Service charges cover the cost of maintaining and insuring the building. In a standard leasehold, these are set by the freeholder or their managing agent. In a share of freehold arrangement, the residents decide collectively. Charges should be more proportionate, though how well that works depends on how organised the residents are.
The Leasehold Advisory Service (LEASE) provides free, impartial guidance on leasehold rights and charges: [EXTERNAL LINK: , opens in new tab]
Lease Extension
Extending a lease as a standard leaseholder involves a statutory process under the Leasehold Reform Housing and Urban Development Act 1993, which entitles qualifying leaseholders to a 90-year extension at a peppercorn ground rent. It requires professional valuation advice and legal input, and the premium can be substantial, particularly on shorter leases.
With share of freehold, lease extension is typically far simpler and less expensive. Because you’re a director or shareholder of the company that holds the freehold, you can grant an informal extension without going through the statutory process. Your solicitor and surveyor should confirm the exact route for the specific property.
Mortgageability and Resale
Both leasehold and share of freehold properties can be mortgaged, subject to lease length. A share of freehold property with a short lease remaining on the individual flat can still cause lender issues if the informal extension hasn’t been completed. Buyers should not assume that share of freehold eliminates all lease-related risk without checking the actual lease length.
For an independent view on what to look for before buying a leasehold property, our guide to RICS Level 2 Homebuyer Reports covers what a surveyor will assess and flag on a pre-purchase inspection.
What Type of Survey Do You Need?
Regardless of whether a property is leasehold or share of freehold, a pre-purchase survey is one of the most important steps you can take. It tells you the physical condition of the property, identifies defects that may affect value, and gives you information you need before you’re legally committed.
For a flat in a converted Victorian or Edwardian building, which covers a significant portion of London’s share of freehold stock, the structural condition of the wider building matters as much as the condition of your individual flat. Damp, roof problems, structural movement and drainage issues affect the whole building, and as a leaseholder or share of freehold owner, you’ll contribute to the cost of fixing them.
RICS Level 2 vs Level 3 for Leasehold and Share of Freehold Flats
For a modern purpose-built flat in good condition, an RICS Level 2 Homebuyer Report is usually appropriate. For an older converted property, or one where there are visible concerns about the structure, fabric or maintenance, an RICS Level 3 Building Survey provides a more detailed assessment and a higher level of analytical depth.
Your surveyor can advise on which is appropriate once they know the age, type and condition of the property. Both reports from Somerset & Sinclair are produced by MRICS-qualified chartered surveyors with direct experience of London’s residential property stock.
Read more about the differences between survey types in our guide: RICS Level 2 vs Level 3 — which survey do I need?
In Summary
Leasehold and share of freehold are not the same thing, but they’re not as complicated as they’re sometimes made to sound. The key difference is who holds the freehold, what control that gives you over the building, and what it means for your costs, your rights, and your ability to extend the lease. Both can be good purchases. Both carry risks that depend on the specifics of the property and the lease.
Getting professional advice before you commit is the most straightforward way to understand what you’re buying. A chartered surveyor can assess the physical condition of the property. A solicitor can review the lease and the management accounts. Between them, you’ll have a clear picture of what you’re taking on.
Somerset & Sinclair provides RICS-regulated surveys and valuations across London. If you’re buying a leasehold flat or a share of freehold property and want independent professional advice, call us on 020 4587 3343 or email info@somersetsinclair.co.uk.
Frequently Asked Questions
1. What is the difference between leasehold and share of freehold?
With a standard leasehold, you own the right to occupy a property for a set number of years, but not the land or building. The freeholder — a separate landlord — owns the building and collects service charges and ground rent. With share of freehold, the leaseholders in the building collectively own the freehold, giving them control over how the building is managed and making lease extensions significantly simpler and cheaper.
2. Is share of freehold better than leasehold?
In many respects, yes. Share of freehold typically gives you more control over service charges and building management, the ability to extend your lease at low or nil cost, and greater transparency over how the building is run. However, it also comes with responsibilities. You’ll be jointly responsible for maintaining the freehold company and making collective decisions about the building, which requires cooperation between all the flat owners.
3. Does share of freehold mean I own the building outright?
Not individually. You own a share in the freehold company or nominee purchaser that holds the building’s title, alongside the other flat owners. You still hold an individual lease on your flat. The collective ownership of the freehold is what distinguishes it from standard leasehold, but you don’t personally own the whole building.
4. Can I extend my lease if I have share of freehold?
Yes, and it’s usually much more straightforward than extending a standard leasehold. Because you’re effectively granting the extension to yourself through the freehold company you co-own, you can typically agree an informal extension to 999 years at a peppercorn ground rent without going through the statutory lease extension process. Your solicitor should confirm the exact procedure for your specific arrangement.
5. What happens to ground rent with share of freehold?
In most share of freehold arrangements, ground rent is either nil or a nominal peppercorn amount. Where the freehold company grants informal lease extensions to its leaseholders, these are typically done at zero ground rent. Under the Leasehold Reform (Ground Rent) Act 2022, new residential leases in England must be at peppercorn rent, but existing leases may still carry older ground rent obligations.
6. How do I know if a leasehold flat has a short lease in London?
Ask your estate agent for the lease length and check it against the original lease start date to calculate what remains. Your solicitor will confirm this in their due diligence, and your RICS surveyor should flag any lease length concern in their report. A lease below 80 years is generally considered short, and one below 70 years can affect mortgageability and resale value significantly.
7. Do I need a survey on a leasehold flat?
Yes. A pre-purchase survey on a leasehold flat is just as important as on any other property. For a standard leasehold flat, the surveyor assesses both the individual flat and, where accessible, the common parts and wider building fabric. Defects to the roof, structure or drainage affect all leaseholders, so understanding the building’s condition before you buy is essential.
8. What is the difference between a leasehold flat London survey and a freehold house survey?
The survey process is similar, but the scope differs slightly. For a leasehold flat, the surveyor will note matters relating to the wider building — such as the condition of the roof, external walls and communal areas — alongside the flat itself. With a freehold house, the entire building is your responsibility, so the report covers it comprehensively. The appropriate RICS level for either property type depends on age, construction and condition.
9. Can I get a mortgage on a share of freehold property?
Yes, most lenders are comfortable with share of freehold properties. However, mortgage approval still depends on the lease length on the individual flat. Even with share of freehold, if the flat’s lease hasn’t been extended and has few years remaining, lenders may decline or impose conditions. Extending the lease before marketing or before purchase avoids this complication.
10. What are the risks of buying a leasehold flat?
The main risks include a short or diminishing lease (which affects value and mortgageability), high or escalating service charges, unreasonable or unresponsive freeholders, and restrictive lease terms. Additional risks include buildings insurance arranged by a freeholder without transparency over the premium, and service charge disputes that can take time and cost to resolve. Professional advice from both a solicitor and a RICS surveyor before exchange is the most effective way to assess these risks.
11. How much does it cost to extend a leasehold in London?
The cost varies depending on the remaining lease length, the property value, the ground rent, and who holds the freehold. For a standard leasehold extension through the formal statutory route, you’ll pay a premium to the freeholder, your own legal and valuation costs, and the freeholder’s costs. On a London flat where the lease is above 80 years, this might range from a few thousand pounds to tens of thousands. Below 80 years, marriage value applies and costs rise sharply. Getting an independent RICS valuation of the premium before negotiating is strongly advised.
12. Should I get a survey on a share of freehold flat?
Yes, absolutely. Share of freehold does not remove the need for a pre-purchase survey. The physical condition of the flat and the building is independent of the ownership structure. A surveyor will assess the property’s condition, identify defects, flag maintenance liabilities, and help you understand what you’re buying. Somerset & Sinclair carries out RICS Level 2 and Level 3 surveys on leasehold and share of freehold properties across London.
