Buyers are paying more than double to secure a freehold property in some areas of England and Wales as buyers wise up to the growing value placed on ownership free from leasehold restrictions.
Analysis by Yopa of Land Registry transactions over the past 12 months found that the average freehold property sold for £310,000 compared with £230,000 for leasehold, a premium of 29.6% on the typical purchase price of £292,500.
The appeal of freehold homes stems from the control they offer over both the property and the land, avoiding ground rents, service charges and lease extensions.
The leasehold system has faced sustained criticism in recent years, particularly over escalating costs and restrictions on owners.
REGIONAL VARIATIONS
In the South East, freeholds fetched 60.6% more than leaseholds over the past year, while premiums also exceeded 50% in the East and West Midlands, East of England and South West.
In some local markets, however, the disparity is far greater. In Westminster, the median freehold sale price of £2.7 million was more than double the £785,000 achieved by leasehold properties – a difference of £1.9 million or 109.9%.
Similar patterns were recorded in Kensington and Chelsea (102.5%), Camden (95.5%) and Islington (90.8%), but also in rural and coastal areas such as the Isles of Scilly (97.0%), South Holland in Lincolnshire (95.4%) and the Forest of Dean (86.6%).
BUYER SENTIMENT
Verona Frankish, chief executive of Yopa, says: “Regardless of property type and location, the figures show that those looking to purchase a freehold will pay a considerable premium versus leasehold properties and this is largely down to the benefits they offer – such as the absence of ongoing costs like ground rent and service charges.
“Leasehold homes have also attracted bad press in recent years which has left a lasting mark on buyer sentiment, with scandals around escalating ground rents and excessive service charges deterring many from leasehold ownership.”
Government reforms have sought to address the imbalance. The Leasehold Reform (Ground Rent) Act 2022 abolished ground rents on most new long leases, while the Leasehold and Freehold Reform Act 2024 introduced measures aimed at simplifying ownership and strengthening protections.
Frankish adds: “Over time these reforms may help to narrow the gap in values. For now, however, the greater security, simplicity and peace of mind offered by freehold continues to justify a premium in the eyes of most buyers.”
