The two main types of interest in land in the United Kingdom are freehold and leasehold.
Typically, in the UK, most houses are likely to have a ‘freehold title’ and most flats have a ‘leasehold title’.
What is Freehold?
Freehold is the best class of title available and simply means that you have outright ownership of the land and any property on it.
There is no time limit on the period of ownership and the only restrictions are planning laws that have to be obtained through applications to the local council, in addition to any covenants and obligations affecting the title.
If you own the freehold interest in a property then you can grant a leasehold interest in it to someone else.
What is Leasehold?
In contrast, Leasehold is an interest in land or property for a specific period of time. The freeholder (also known as the landlord) grants a lease to the tenant (also known as the lessee), for a fixed term; generally, for a lease length of 99, 125 or 999 years.
Leases for residential property are usually lengthy and complex documents although the basic principle is the same. The aim of the lease is to ensure that in return for the lessee paying the rent and service charge and observing the covenants and obligations contained in the lease, the landlord agrees to grant to the lessee the pr