The Difference Between Freehold and Leasehold Homes in Belgravia

If you’re looking to buy a flat in Belgravia, Mayfair, or Knightsbridge, knowing the difference between freehold and leasehold is essential. Many of the stunning terraces that characterise the area belong to the Grosvenor Estate and other landowners, so they are the freeholder – also referred to as the landlord. Others are sold entirely freehold, or with a share of the freehold, but the ‘hold’ status is almost impossible to tell from the outside. 

Once you realise the difference between freehold and leasehold, you can understand the options available and accurately weigh up the pros and cons. 

Leasehold & Freehold Summarised 

There are two main types of home ownership in England; freehold and leasehold. Most flats and apartments are sold on a leasehold basis but some houses are, too. It’s essential to understand what each of these terms means before purchasing a property in Belgravia, or elsewhere in central London. 

1 Freehold 

What is freehold tenure? When you buy freehold, you buy the property and the land on which it is built. Usually, there are no additional service charges or ground rent to pay on the property, which you will own in perpetuity. Unless it is a listed building or in a conservation area, you can make any alterations to the property, subject to planning laws. 

2 Leasehold 

What is leasehold? Unlike freehold homes, buying a leasehold gives the buyer the right to occupy their new abode for the time stated in the lease. However, when the leasehold ends, the freeholder regains control of the property.  

Leaseholders have ownership of the property’s interior but not the ground on which it is built, the exterior walls or the roof. Therefore, leaseholders commonly need permission from the freeholder to make alterations or structural changes to the property. 

“Share of freehold” is one notable variation of leasehold ownership. Purchasing a “share of freehold” property means acquiring part of the company that owns the freehold, and offering collective management control to other owners. This can lead to more autonomy, lower maintenance costs and potentially longer leases. 

Freehold vs leasehold at a glance  

London’s leasehold landscape can be confusing so use our table to quickly establish the difference between freehold and leasehold properties in the capital. 

Freehold	Leasehold
Buyer owns the property and the land it is built on	Buyer owns the property interior but not the land
Typically no service charge to pay if the buyer owns the entire freehold	Service charges payable to the block manager or freeholder
No ground rent to pay	Ground rent payable to the freeholder
Few or no restrictions on alterations and structural changes	Alterations and structural changes need written permission from the freeholder
Buyer is responsible for maintenance costs, or a portion of these if they own a share of the freehold	Communal area and building maintenance is generally the responsibility of the freeholder
Estate charges sometimes payable if the property is in a block or on a new-build estate	Estate charges often payable if the property is in a block or on a new-build estate
Open market value usually higher than a leasehold property	Open market value usually lower than a freehold property
No lease that might expire, so better security in the property	A lease that may expire or need extending, costing the buyer money or ending the residency
Better access to mortgages	Some lenders will refuse a leasehold property if the lease has fewer than 80 years left

The Key Differences With Leasehold Property 

So, what sets leasehold property apart from freehold properties? Here are the most important features to remember: 

1. Specific Leasehold Terms 

Leasehold agreements, especially in prestigious central London areas like Belgravia, Mayfair and Kensington, often involve specific obligations for leaseholders. These are designed to maintain high property standards, aside from the essential terms of the lease. 

Maintenance & Decorum: Leaseholders are generally required to keep their property in excellent condition. This includes both the interior spaces and, in some cases, any associated external features like balconies or gardens. 

Behavioural Expectations: The lease may stipulate that leaseholders behave in a manner that does not disturb their neighbours or detract from the overall living experience in the development. This might include noise restrictions and guidelines for common area usage. 

Restrictive Clauses: It’s common for leases to include limitations on pet ownership, subletting, and alterations to property. For example, getting the landlord’s prior consent before renovating or having pets is usually necessary. 

Landlord’s Responsibilities: The lease will always clearly outline the landlord or freeholder’s obligations, which typically include managing, maintaining, and repairing the building’s structure, common areas (e.g., staircases, hallways, and lifts), and exterior grounds. This can also cover additional services like security, concierge, and leisure facilities in prime locations. And likewise, this often reflects the steeper service charge or ground rent. 

Compliance with Local Regulations: Given the historical and cultural significance of areas like Belgravia, leaseholders are likely subject to conservation area regulations or listed building constraints. Naturally, this can affect potential alterations, repairs, and maintenance responsibilities. 

2. A Leasehold Length 

A key thing you need to check before viewing a property is the lease length – as they are not all the same. 

Initially, leases are long, typically around 125 years but can extend up to 999 years occasionally. As time progresses and the property changes hands, the remaining lease duration decreases. If a lease ends, then ownership reverts to the freeholder. Properties with less than 79 years remaining on the lease can pose significant challenges, particularly in securing a mortgage.  

This is because most lenders require a minimum lease length. Additionally, selling such properties can be difficult, limiting potential buyers to those able to purchase outright. 

3. Differences In Price 

Leasehold property is generally cheaper than freehold property because it doesn’t involve permanent ownership of the property and the land it sits on. Nor does it include the greater autonomy over the property and land offered by freehold homes. Leaseholds, while initially more affordable, commonly include additional fees and restrictions, leading to potential long-term costs and limitations. 

4. Paying ‘Ground Rent’ 

Many owners of leasehold properties pay ground rent to the landlord annually or half-yearly. Traditionally, this is a nominal amount, known as a ‘peppercorn rent’ and sometimes for less than £1 a year – or no more than £300. 

However, approaches to ground rent have evolved considerably. Today, leaseholders may pay significantly more, with amounts above £300 a year, depending on the lease agreement. For example, some modern leases include clauses allowing the ground rent to increase over time, potentially doubling every 10 or 25 years. 

The Leasehold Reform (Ground Rent) Act 2022 banned ground rents for anyone buying new-build houses on a long lease. That said, those rules do not apply to leases already agreed upon before this law came into force. It doesn’t apply to new-build flats either. 

Further change is on the horizon. The draft Commonhold and Leasehold Reform Bill is currently making its way through Parliament and when it becomes an Act, it proposes ground rent is capped at £250, reducing to a peppercorn amount of £0 over a 40-year period. 

5. Obligatory Service Charges & Sinking Funds 

To keep the development’s communal areas intact and presentable, it is common for leaseholders to pay regular monthly or quarterly service charges, with the fees also covering the cost of buildings insurance.  

Some of the service charge can be siphoned off to create a ‘sinking fund’ in the case of a costly bill – such as a roof repair or structural reinforcement. Service charges vary according to the development’s size, amenities and management efficiency. 

Should a landlord plan to undertake works resulting in costs exceeding £250 for any individual leaseholder, they must engage in a consultation process as mandated by section 20 of the Landlord and Tenant Act 1985. 

The Pros And Cons Of Leasehold Property 

Leasehold Pros 

• Initially Affordable – Leasehold properties are often less expensive upfront than freehold properties. This makes them accessible to more buyers, particularly in expensive urban areas where few could dream of buying a freehold home outright. 
• Less responsible for Maintenance & Repairs – The responsibility for maintaining the building’s exterior and common areas usually falls on the landlord or management company, reducing costs for the individual leaseholder. 

Leasehold Cons 

• Ground Rent & Service Charges – Leaseholders are typically required to pay ground rent and service charges, which can increase over time and add a significant cost to the ownership (even if cheaper initially). 
• Decreasing Lease Duration – A leasehold property is owned for a fixed term. As the lease shortens, the property can depreciate in value and may be challenging to sell or mortgage. This is likely to be a growing anxiety for leaseholders. 
• Restrictions & Permissions – Leaseholders commonly face restrictions on property modifications and need permission for certain changes, limiting personalisation and control. This differs from freehold property, where there is a lot of freedom to change the home as you see fit. 

The Pros And Cons Of Freehold Property 

Freehold Pros 

• Complete Ownership – Freehold means owning the property and the land it stands on indefinitely, offering complete control over the property. 
• No Ground Rent or Service Charges – Freeholders are not subject to ground rent, and rarely to service charges. This saves the freeholder a lot of money in the long run. 
• No Lease Duration Worries – With no lease to expire, freehold properties do not suffer from the depreciation associated with diminishing lease terms, providing long-term security for their property purchase. 

Freehold Cons 

• Maintenance Responsibility – Freeholders are responsible for all maintenance and repair work, which can be costly and time-consuming. 
• Higher Purchase Price – Freehold properties typically have a higher initial purchase price than leaseholds, reflecting the superior value and autonomy they offer. 

Where does leasehold reform actually stand in 2026?  

While the Leasehold and Freehold Reform Act 2024 received Royal Assent in May 2024, not all of its contents have been implemented. So far, only the building safety changes, the removal of the two-year ownership wait to extend a lease and the Right to Manage reforms have become law.  

Yet to be actioned are valuation rate changes, service charge and building management reforms, and altering or capping legal and valuation costs.  

Additionally, some aspects of the Leasehold and Freehold Reform Act 2024 depend on the Commonhold and Leasehold Reform Bill passing into law. These include the removal of marriage value, and the standardisation of lease extensions to 990 years with zero ground rent. 

Property owners don’t have to wait until both items of legislation are in full force to act. Best Gapp’s leasehold enfranchisement service can help leaseholders gain more control or take ownership now. 

What is commonhold and could it replace leasehold?  

Commonhold allows buyers to own the entirety of their home on a freehold basis but jointly own common areas. The current Government’s draft Commonhold and Leasehold Reform Bill proposes that all new-build flats should be created as commonhold, with leasehold phased out completely. Whether this proposal makes it into the final Act is currently unknown. 

Can You Extend The Lease On A Leasehold Property? 

Under the Leasehold Reform, Housing & Urban Development Act 1993, flat owners are entitled to extend their lease by 90 years at a fair market price. They can make a leasehold extension request as soon as they complete the purchase. A lease extension can also be initiated by the seller at the buyer’s request as a condition of sale. 

5 Steps To Extend Your Lease: 

1. Legal Representation & Valuation: 

Obtain legal representation and professionally value your property to determine the premium, or the ‘realistic cost’ of the lease extension. Factors influencing the premium include the property’s value, the remaining term of the lease, and any applicable ground rent. A lease extension calculator, like the one on the Lease Advice website, can offer a preliminary estimate. 

2. Serve A Section 42 Notice: 

Serve a Section 42 notice to the freeholder, proposing the premium you’re willing to pay for the lease extension. The notice must also specify a response deadline, not less than 60 days from serving. 

3. Deposit Payment: 

A deposit of £250 or 10% of the proposed premium (whichever is higher) may be required. The freeholder is entitled to conduct their valuation of the property. You’re responsible for covering both your own and the freeholder’s legal and valuation fees. 

4. Landlord’s Counter-Notice: 

The freeholder should respond with a counter-notice, accepting your terms or proposing alternative ones. This initiates negotiations to agree on the final terms. 

5. Court Action (If Necessary): 

Suppose the freeholder does not respond within the specified timeframe. In that case, you can apply to the county court for a lease extension within the next 182 days. Although court action is a last resort, it’s an option if negotiations fail. 

Can You Buy The Freehold On A Leasehold Property? 

In considering the complexities of leasehold and freehold properties, it’s also valuable to understand the concept of “buying the freehold” of a property, known as leasehold enfranchisement 

This process allows leaseholders to collectively purchase the freehold of their building, converting their leases into freehold ownership. However, enfranchisement is often a complicated and expensive journey, involving legal procedures and costs that can vary widely depending on the specifics of the property and the number of tenants involved. 

These considerations underscore the importance of seeking independent legal and financial advice in advance, whether you’re extending a lease, buying the freehold, or dealing with properties that have unusual quirks like ‘flying freeholds’. 

Is leasehold enfranchisement worth it in Belgravia?  

Leasehold enfranchisement is worth considering if you live in Belgravia, Pimlico, Knightsbridge, Mayfair or any other central London neighbourhood where many of the properties are leasehold. 

Leasehold enfranchisement gives the occupant(s) more security in their home and can help reduce annual costs. The process can be complex and must be executed in line with various Government Acts, so professional guidance is advised – especially where a group of leaseholders want to take collective action.  

Best Gapp’s leasehold enfranchisement service is frequently chosen by London’s leaseholders as we have an intimate working knowledge of leasehold and can confidently manage the process on behalf of our clients. 

Frequently Asked Questions About Leaseholds 

Get the leasehold help you need 

Best Gapp is a Belgravia estate agent, chartered surveyor and property valuer who specialises in leasehold enfranchisement. For further information about leasehold property for sale in Belgravia and other parts of prime central London, contact Best Gapp’s property specialists today.