Understanding the property market can be challenging, especially when the explanations are unintentionally confusing. Whether you're new to the property market or a seasoned homeowner, there’s lots of knowledge and terms you're just expected to know. In this article, we are going to simplify the explanation of the two terms freehold and leasehold.

What is freehold?  

A freehold property is where you are the forever owner of the property and land you are buying, until you sell it to somebody else. In Scotland, the majority of properties are freehold, except for shared ownership properties and a percentage of new-build homes. 
The property listing will always highlight the legal ownership term, so make sure to check.

What is leasehold?

A leasehold property is where you are buying the property, but not the land it has been built on. This is common in apartments, where you will lease the property from the party who owns the freehold of the building.
A leasehold property is often cheaper but time sensitive, as once that lease has ended, ownership of the property will return to the freeholder.

What’s the difference between freehold and leasehold?  

The main differences between a freehold and leasehold property are that the freehold property will be more expensive as you will outright own the property and land with no time limit, whereas a leasehold property will be cheaper as you only own the property for a certain period of time.
With freehold properties, you have complete control over changing anything. If you live in a leasehold and want to change something that will alter the external appearance (like an extension or new windows), you must contact the freeholder for permission.
Leasehold properties usually come with a regular, monthly service fee made to the freeholder for the upkeep of the building.

Are freehold and leasehold two terms you need to know?  

These two terms are extremely important to know when buying a property, as freehold and leasehold titles impact the level of ownership when buying a property.

What’s a short-term lease?  

A short lease is where you purchase a leasehold property with a short period of time remaining on the contract. Regularly priced to sell, these short leases offer a good deal, but be aware that you will have to pay for a lease renewal when it runs out, which can come at a hefty cost.

What is a commonhold?  

Commonhold is a variant of freehold, where a building with multiple occupancies is divided into freehold properties. The difference between a commonhold and a freehold is that the shared ‘common’ areas (hallways and staircases) are managed by a ‘commonhold association'—the owners of the freehold properties.

Freehold vs. leasehold: Which one’s right for you?  

When deciding to join the property ladder, various types of ownership are available to suit different situations. A freehold property is there for someone who is financially prepared and ready to take ownership of a full home, whereas a leasehold property is there to help people join the ladder easily with more affordable options, such as an apartment in a large building.

Key article takeaway  

Property terminology can be a difficult subject to understand fully, but the key points you need to remember are:

A freehold owner owns the property and land indefinitely, whereas a leasehold owner owns just the property for the length of the lease agreement. By simplifying the two terms like this, it helps you identify the two forms of legal property ownership.

  

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