What's the Difference between Freehold and Leasehold?

Real estate laws and regulations can be very complicated, but understanding the difference between “Freehold” and “Leasehold” is really quite simple. The basic difference is a question of legal rights to the property.

What is Freehold?

Freehold is basically the ownership of the property that includes the land and all the structures located on that land. In order for a freehold to exist, the property must meet two requirements:

  • The ownership title or land deed must be an undetermined period.
  • The property must be immovable, such as land, buildings, although this does not include vehicles, livestock, etc.

What is Leasehold?

Leasehold, on the other hand, simply means that the land, although it can be bought and sold by the leasehold owner, will never have legal right to the property. After the terms of the leasehold agreement have been met, the property will be returned to the original owner.  Generally, when a leasehold property is sold, it is sold with the conditions of the leasehold still in tact. For example, if the leasehold was sold for 100 years, and the first owner sells it to the second owner after 30 years, the second leasehold owner will be entitled to 70 years on this property before it reverts back to the original owner.