Leasehold vs Freehold Property: Difference and Comparison

Both leasehold and freehold properties are real estate-related terms. In a leasehold property, the land is taken for a lease, and the buyer is not the property’s original owner.

Key Takeaways

  1. Ownership: Leasehold property is owned for a fixed term under a lease agreement, while freehold property is owned outright with no time limit.
  2. Duration: Leasehold ownership expires, after which the property reverts to the freeholder, while freehold ownership is permanent.
  3. Control: Leasehold property owners must comply with the terms of the lease and may have restrictions on property modifications, while freehold property owners have more control over their property.

Leasehold vs Freehold Property

The difference between Leasehold property and Freehold property is about the ownership of the property. In a leasehold property, the buyer is not the owner and has limited rights over the property. In a freehold property, the buyer becomes the property owner and has complete ownership.

Leasehold vs Freehold property
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A leasehold property is left to the tenant for a lease. Generally, the government leases a property for 30- 99 years. During this period, the lessee can use this property as they wish.

A freehold property is where the buyer becomes the owner of the property. After buying the property for an amount, they have full rights to the area, which is not limited to a specific period.


 

Comparison Table

ParameterLeasehold PropertyFreehold Property
OwnershipIn a leasehold property, the lessee is not the original owner. They have only leased the property. Their rights are limited.In a freehold property, the buyer becomes the owner. They can use the property as they wish.
PeriodThe lessee can have the property only for a limited amount of time. This will be fixed at the time of the lease.As the buyer becomes the property owner, they can have the property for a lifetime. There is no fixed period for this.
PaymentThe payment at the time a property is leased would be extra if the lease period increases.The payment would be in bulk if the property is bought, and no extra charge is needed after the transfer of ownership.
SupportThe bank supports financially only if the lease period is over 30 years.Bank supports financially if a property is bought and bank loans are available.
RentFor leased property, different rents are unavoidable, such as ground rent, maintenance fees, and much more.If a person owns a property, they do not have to pay rent to anyone other than the tax related to it.

 

What is Leasehold Property?

A property leased for a fixed period is called a leasehold property. The person who hires such a property is called a lessee.

The difference between a rental and a leased property is that the period of a rented property is lesser than that of a leased property. The similarity between them is that the tenants are not the real owners of the property.

If the agreement during the lease is such that the owner or the tenant can terminate this according to their wish, it is called a tenancy at will.

leasehold property
 

What is Freehold Property?

When a person buys a property, by all means, they become the owner, and ultimately the property becomes freehold. In a freehold property, the owner has the right to perform his wishes that abide by the law.

If the owner wishes to sell any property, no consent is required from anyone. They have full rights regarding this. A freehold property can be inherited, and no legal formalities exist to transfer ownership.

When compared to a leased property, a freehold property is more expensive. This is due to the access to more rights than what is accessible in a leased property.

freehold property

Main Differences Between Leasehold and Freehold Property

  1. The financial support from a bank is less for leased property and can be obtained only if the period is more than 30 years. Bank loans can be acquired easily to buy a freehold property.
  2. For leasehold property, rents such as ground rents are unavoidable, while only government taxes are to be paid for a freehold property.

Difference Between X and Y 2023 04 06T152742.028
References
  1. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6229.2009.00241.x

Last Updated : 13 July, 2023

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10 thoughts on “Leasehold vs Freehold Property: Difference and Comparison”

  1. I found the comparison and the table very helpful to understand differences between leasehold and freehold properties. However, I wish the article would also include more practical examples and case studies to illustrate the differences and make it less theoretical.

  2. The article presents a good balance of theoretical knowledge and practical applications, making it easy to comprehend the difference between leasehold and freehold properties. It clarifies a segment that is often made confusing.

  3. This article lacks depth and it’s just scratching the surface of a complicated topic such as leasehold and freehold. I would have liked to see more detail on the legal implications and differences in the buying process of these property types.

  4. I enjoyed this article! I was always confused about the distinction between leasehold and freehold properties. This article has helped me clear out some doubts.

  5. Avatar of Bailey Alexander
    Bailey Alexander

    I am unimpressed, one would expect more concrete, real-life examples, and less theoretical talk about this topic.

  6. Avatar of Knight Caroline
    Knight Caroline

    There is plenty of useful information here. But, it would have been more enjoyable if it were less dry and provided a few more examples.

  7. The article does a great job explaining the technical differences between leasehold and freehold properties. I just wish it had dived more into the pros and cons of each kind.

  8. This article is a very informative piece of work that helped me understand the difference between leasehold and freehold property. It also helps me distinguish the operations of the two types of properties, making it easier to understand the restrictions of leasehold as well as the freedom of freehold ownership.

  9. This article presents a lot of valuable information. However, the lack of real case examples weakens its power and substance.

  10. Reading this article really clears up my confusion about the difference between leasehold and freehold properties. It summarizes everything concisely and clearly.

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