What is Freehold?
Freehold is a form of property ownership where you own both the building and the land it stands on outright, with no time limit on your ownership. Unlike leasehold, where your ownership eventually expires, freehold ownership lasts indefinitely. In England and Wales, most houses are freehold, while most flats are leasehold - though flat owners can acquire a "share of freehold" by purchasing the freehold jointly with their neighbours.
Understanding freehold matters because it affects your property rights, your costs, and - if you're a leaseholder - whether buying into the freehold might be an option worth considering alongside extending your lease.
A Simple Example
Imagine a block of six flats. The building sits on a piece of land, and someone owns that land and the structure - this is the freeholder. Each flat owner has a lease granting them the right to occupy their flat for a fixed period (say, 99 years).
The freeholder collects ground rent from each leaseholder and has responsibilities for the building's structure and common areas. The leaseholders, meanwhile, have a diminishing asset - their lease gets shorter every year.
Now imagine all six flat owners decide to buy the freehold together. They form a company, purchase the freehold from the landlord, and each become a shareholder. They now have a "share of freehold." Each person still owns their flat on a leasehold basis, but collectively they also own the building and land. They can extend their leases cheaply, eliminate ground rent, and control how the building is managed.
Why It Matters to You
If you own a leasehold flat, the question of freehold often comes up alongside lease extensions. Here's why it matters:
The key benefit: Owning a share of freehold gives you control. You and your fellow freeholders can make decisions about building maintenance and insurance without an external landlord.
The key limitation: Even with share of freehold, you still own a leasehold flat. Your lease still has a term, and time continues to tick away on it. You'll still need to extend your lease eventually - it's just cheaper and easier when you're also the freeholder.
The practical challenge: You cannot force the freeholder to sell the freehold of a flat to you alone. By law, at least 50% of leaseholders in the building must participate. This means coordinating with neighbours, agreeing on costs (which vary based on each flat's lease length), and working together through a legal process that typically takes 6-12 months.
Freehold vs Share of Freehold
It's worth distinguishing between owning a freehold property and owning a share of freehold:
Freehold property (typically houses): You own the building and land outright. No lease, no landlord, no ground rent. Complete ownership with no time limit.
Share of freehold (flats): You own your flat on a leasehold basis AND own a share in the freehold of the building, typically through a management company. You're both a leaseholder and a freeholder simultaneously.
The share of freehold structure is common in smaller blocks where leaseholders have bought out the freeholder. The freehold is usually held by a limited company, with each flat owner holding a share in that company. This is because HM Land Registry only allows 4 owners of any piece of property, so if there are more than 2-3 flats that is when it typically requires a company to be setup which then becomes the owner and then each person has a share in that company.
The Collective Enfranchisement Process
Forcing the freeholder of a block of flats to sell you the freehold is called "collective enfranchisement." The process is governed by the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993).
To qualify, your building must:
- Contain at least two flats
- Have at least two-thirds of flats held by qualifying tenants (leaseholders with leases originally over 21 years)
- Not have more than 50% of internal floor space used for non-residential purposes (raised from 25% in March 2025)
At least 50% of qualifying tenants must participate in the purchase.
The cost depends on several factors: the length of each participating lease, the ground rents payable, the value of each flat, and any development potential. Where any flat has a lease below 80 years, marriage value comes into play, significantly increasing the premium - though marriage value abolition is pending under the Leasehold and Freehold Reform Act 2024.
Recent Legal Changes
The Leasehold and Freehold Reform Act 2024 has already brought some changes, with more to come:
Now in effect (as of January 2025):
- The two-year ownership rule has been abolished - you no longer need to have owned your flat for two years before participating in collective enfranchisement
- The non-residential floor space limit has increased from 25% to 50%, making more buildings eligible
- Leaseholders no longer have to pay the freeholder's legal and surveyor costs
Pending implementation:
- Abolition of marriage value (currently subject to legal challenge)
- Standardised valuation methodology
- Extended lease terms to 990 years for new extensions
Should You Buy the Freehold or Extend Your Lease?
This is one of the most common questions we're asked. The honest answer: for most people, extending your lease is simpler, faster, and achieves the main goal of protecting your property's value.
Buying the freehold makes sense if:
- You plan to stay long-term and want control over your building
- Your freeholder is unresponsive or difficult to deal with
- The building has development potential (loft conversions, garden space)
- Most neighbours are keen and well-organised
Extending your lease might be better if:
- You want to act quickly (lease extensions are faster)
- Neighbours are uninterested or uncooperative
- You're planning to sell in the next few years
- You prefer certainty and simplicity over taking on management responsibilities
Either option is better than letting a short lease continue to decline. The important thing is to act before your lease drops below 80 years, when costs increase significantly due to marriage value.
In Summary
Freehold represents outright ownership of property and land. For flat owners, "share of freehold" means jointly owning the freehold with other leaseholders - giving you control over the building while still holding your flat on a lease.
