After years of renting, Sophia and her family finally decided to buy their dream home. They were tired of dealing with landlords, rent hikes, and restrictions on making their homes their own. As they sat with their real estate agent, she asked, “Are you looking for a leasehold or a freehold property?” The question caught Sophia off guard. She had heard the terms before but needed to figure out the difference. The agent explained that freehold meant full ownership of the house and the land beneath it. For Sophia, that word—freehold—instantly resonated. It was not just about owning a home; it was about owning the future, with no restrictions, no landlords, and no ticking clock on a lease. That sense of permanence was precisely what she wanted for her family. However, what does owning a freehold property mean? Moreover, why is it often considered the “gold standard” in real estate?
- What Is Freehold Property?
At its core, a freehold property is one where the owner holds complete and indefinite ownership of the land and the building. Unlike leasehold properties, which are typically owned for a fixed period (99 or 125 years), freehold ownership is permanent. This means the owner can live in, modify, or sell the property at will without worrying about a lease running out or renewing terms with a landlord.
In legal terms, freehold ownership includes two fundamental rights:
- Right to Possession: Full and indefinite right to occupy and use the property.
- Right to Control: The ability to change the property (subject to local zoning laws), transfer ownership, or pass it on as inheritance.
Example:
In the U.S., the most common form of homeownership is freehold, usually called “fee simple.” A fee-simple freehold gives the owner the complete set of rights over the property and the ability to sell, lease, or pass it down without limitations tied to a specific term.
- Global Freehold Trends: Where Is Freehold Common?
Freehold ownership is common in many parts of the world, but how it is treated can vary by country. Here is a quick look at some regions where freehold is prevalent and others where it is not:
- United States: In most states, freehold properties (fee simple) are the norm. The average homebuyer in the U.S. expects to own both the property and the land indefinitely. According to data from the U.S. Census Bureau, approximately 87% of residential properties in the U.S. are freehold (U.S. Census Bureau, 2023).
- United Kingdom: Freehold ownership is expected in the U.K., particularly for houses, though many apartments (flats) are sold as leaseholds. In 2022, it was estimated that 57% of residential properties in England and Wales were freehold, while leasehold accounted for about 43%, predominantly in flats (U.K. Land Registry, 2023).
- United Arab Emirates: Freehold property was introduced relatively recently in Dubai. Before 2002, foreigners could not own property outright. However, freehold zones were created after reforms, allowing expats to own properties without time restrictions. This move led to a boom in Dubai’s real estate market. Freehold now covers areas like Downtown Dubai and Palm Jumeirah, with over 60% of property transactions involving freehold sales (Dubai Land Department, 2023).
- India: Freehold properties are highly sought after in India, especially in urban areas. The Indian real estate market has long been dominated by freehold land, considered a more secure and attractive investment than leasehold properties. According to the Ministry of Housing and Urban Affairs, 80% of residential properties in India’s top metro cities are sold as freehold (MoHUA, 2023).
- The Benefits of Freehold Ownership
For many homebuyers, freehold is considered the “gold standard” of property ownership. Here is why:
- Full Control and Flexibility
The most significant benefit of freehold property is complete control over your home. You can renovate, extend, or modify the property as you see fit (subject to local regulations). This allows freehold owners to personalize their property to their taste without needing landlord permission or worrying about lease clauses.
- Long-term Security
Freehold offers peace of mind. With no expiry date on ownership, freehold owners never need to worry about renewing a lease or potentially losing their property at the end of a lease term. This is especially important in cities like London, where leasehold terms can sometimes shrink to 40 or 50 years, leading to steep costs for lease extensions.
- Higher Resale Value
Freehold properties generally command higher prices in the market than leasehold properties. This is because buyers know they are getting indefinite ownership without the complications of a lease. According to a report by Knight Frank, freehold properties in the U.K. sell for an average of 10-15% more than comparable leasehold homes (Knight Frank, 2022).
- Inheritance and Legacy
Freehold properties are more accessible to heirs without the legal complications of leasehold ownership. For many families, freehold property is seen as a long-term investment, not just for themselves but for future generations.
- Drawbacks of Freehold Ownership
While freehold is generally preferred, it is not without its drawbacks:
- Higher Initial Costs
Freehold properties are often more expensive than leasehold alternatives. The upfront costs can be significantly higher since you buy both the land and the building. Freehold properties can be prohibitively expensive for some buyers in cities with limited space, like London or New York.
- Maintenance Responsibilities
With a freehold property, all maintenance responsibilities fall on the owner. Unlike leasehold properties, where the Landlord might take care of external maintenance or communal areas, freehold owners must handle repairs, landscaping, and general upkeep themselves.
- Limited Availability in Some Markets
Freehold properties are rare or completely unavailable in specific real estate markets. For instance, in cities like London, many apartments are sold as leaseholds, and finding a freehold flat can be difficult. Similarly, in some countries like Singapore, most properties are sold as leaseholds, with scarce and costly freehold options.
- Freehold vs Leasehold: Key Differences
To understand freehold more fully, it is helpful to compare it with its counterpart—leasehold:
AspectFreeholdLeasehold
Ownership: Own the property and the land permanently for a fixed term.
Control Full control over modifications and use is subject to lease conditions.
Maintenance Owner responsible for all maintenance Landlord responsible for external upkeep
Resale Value Generally higher resale value Lower resale value due to limited-term
Inheritance Can be quickly passed down as inheritance Complications with lease expiration
- Current Freehold Market Trends
Increased Demand for Freehold Properties
Freehold properties remain highly sought after as real estate markets continue to evolve. In recent years, the pandemic accelerated a shift in buyer preferences, with more people seeking long-term security in freehold homes. For example, the demand for freehold houses surged 25% in the U.K. in 2021 and 2022 as buyers sought more space and control (Savills, 2023).
Rise in Remote Work Spurs Freehold Interest
Remote work has prompted many individuals to relocate from expensive urban centers to more affordable regions, where freehold properties are more common. In the U.S., cities like Austin, Texas, and Raleigh, North Carolina, have seen a 20% increase in freehold home purchases in 2023 as remote workers seek more affordable long-term investments (Zillow, 2023).
Conclusion: The Enduring Appeal of Freehold
Owning a freehold property represents more than just owning a home—it is about owning the land beneath it, controlling your future, and enjoying the peace of mind with permanent ownership. For many, freehold property is the ultimate real estate goal, offering flexibility, long-term security, and a greater sense of investment. Whether you are buying a family home or looking for a legacy investment, the benefits of freehold property make it one of the world’s most attractive and valuable forms of real estate ownership.
