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Home Press releasesProperty marketFreehold house price premiums climb by 6.5% year on year, now commanding 42% more than leasehold homes
Freehold house price premiums climb by 6.5% year on year, now commanding 42% more than leasehold homes
- Property market
- 26.02.24
- Benham & Reeves
The latest research by London lettings and estate agent, Benham and Reeves, has revealed that the house price premiums commanded by freehold properties has climbed by an average of 6.5% across England and Wales, making them 42% more valuable than a leasehold home. However, leasehold homes have better weathered a cooling housing market having seen a lower level of house price depreciation.
Benham and Reeves analysed the latest Gov house price data (Dec 2023 – latest available)*, looking at the average value of both a freehold and leasehold home across each region of England and Wales and how the premiums commanded by the latter have changed when compared to the previous year.
The research shows that the average freehold property commanded a price tag of £300,000 in 2023. Not only was this 42% more than the average leasehold home, but this freehold price premium has climbed by 6.5% when compared to 2022.
The South East was home to the highest house price premium for a freehold home, commanding 93% more versus the average price of a leasehold property.
Across the East of England, the East Midlands and the South West, freehold house price premiums averaged 80% in 2023, with the West Midlands also home to a hefty premium at 71%.
The East of England has also seen the premium paid for a freehold home increase by the greatest margin, up by 7% year on year, with the South East (+4.6%) and West Midlands (+3.5%) also seeing the strongest growth in freehold price premiums.
However, this hasn’t been the case across the board, with Yorkshire and the Humber (-0.7%), Wales (-3.2%), the North East (-4.8%) and East Midlands (-5.2%) seeing a reduction in freehold house price premiums.
What’s more, it’s leasehold homes that have better weathered a cooling UK property market in 2023.
Over the last year, the average price paid for a freehold home across England and Wales has fallen by -6.1%, however, the price paid for the average leasehold home has reduced by just -1.6% during the same period.
In fact, leasehold homes have seen a lower rate of house price depreciation versus freeholds in the East of England, South East, West Midlands, London, the South West and North West, while in Yorkshire, Wales, the North East and East Midlands it’s freehold homes that have performed better when it comes to annual house price change.
Director of Benham and Reeves, Marc von Grundherr, commented:
“The general perception amongst many homebuyers is that freehold homes make for a safer investment as they don’t have to worry about the lease expiring, ground rents, service charges, or seeking permission from the freeholder for any notable changes.
They also tend to be larger homes versus leaseholds which are, more often than not, flats and apartments.
As a result, freehold homes generally command a health house price premium and, as our research shows, this premium has only grown all the larger over the last year.
However, leasehold homes certainly have their place in the market and, what’s more, they’ve made for a better investment over the last year, having only seen a marginal reduction in value versus quite a substantial drop in the average price of a freehold home.”
| Location | Average Freehold House Price (2023) | Average Leasehold House Price (2023) | Freehold House Price Premium (£) | Freehold House Price Premium (£) |
|---|---|---|---|---|
| South East | £425,000 | £220,000 | £205,000 | 93% |
| East of England | £360,000 | £200,000 | £160,000 | 80% |
| East Midlands | £243,000 | £135,000 | £108,000 | 80% |
| South West | £332,500 | £185,000 | £147,500 | 80% |
| West Midlands | £248,500 | £145,000 | £103,500 | 71% |
| London | £635,000 | £430,000 | £205,000 | 48% |
| Wales | £200,000 | £143,250 | £56,750 | 40% |
| Yorkshire and the Humber | £200,000 | £152,000 | £48,000 | 32% |
| North West | £215,000 | £165,000 | £50,000 | 30% |
| North East | £157,000 | £125,000 | £32,000 | 26% |
| England and Wales | £300,000 | £211,250 | £88,750 | 42% |
| Location | Average Freehold House Price (2023) | Annual Change (%) | Average Leasehold House Price (2023) | Annual Change (%) |
|---|---|---|---|---|
| East of England | £360,000 | -3.2% | £200,000 | -7.0% |
| South East | £425,000 | -1.2% | £220,000 | -3.5% |
| West Midlands | £248,500 | -1.3% | £145,000 | -3.3% |
| London | £635,000 | -1.6% | £430,000 | -3.0% |
| South West | £332,500 | -0.7% | £185,000 | -1.3% |
| North West | £215,000 | -2.7% | £165,000 | -3.5% |
| Yorkshire and the Humber | £200,000 | -2.4% | £152,000 | -1.9% |
| Wales | £200,000 | -4.8% | £143,250 | -2.6% |
| North East | £157,000 | -3.7% | £125,000 | 0.0% |
| East Midlands | £243,000 | -2.8% | £135,000 | 0.0% |
| England and Wales | £300,000 | -1.6% | £211,250 | -6.1% |
| Location | Average Freehold House Price (2022) | Average Leasehold House Price (2022) | Freehold Price Premium (£) | Freehold Price Premium (%) | Average Freehold House Price (2023) | Average Leasehold House Price (2023) | Freehold Price Premium (£) | Freehold Price Premium (%) | Annual Change in Freehold Premium (£) | Annual Change in Freehold Premium (%) |
|---|---|---|---|---|---|---|---|---|---|---|
| East of England | £372,000 | £215,000 | £157,000 | 73% | £360,000 | £200,000 | £160,000 | 80% | £3,000 | 7.0% |
| South East | £430,000 | £228,000 | £202,000 | 89% | £425,000 | £220,000 | £205,000 | 93% | £3,000 | 4.6% |
| West Midlands | £251,850 | £150,000 | £101,850 | 68% | £248,500 | £145,000 | £103,500 | 71% | £1,650 | 3.5% |
| London | £645,000 | £443,520 | £201,480 | 45% | £635,000 | £430,000 | £205,000 | 48% | £3,520 | 2.2% |
| South West | £335,000 | £187,500 | £147,500 | 79% | £332,500 | £185,000 | £147,500 | 80% | £0 | 1.1% |
| North West | £221,000 | £170,950 | £50,050 | 29% | £215,000 | £165,000 | £50,000 | 30% | -£50 | 1.0% |
| Yorkshire and the Humber | £205,000 | £155,000 | £50,000 | 32% | £200,000 | £152,000 | £48,000 | 32% | -£2,000 | -0.7% |
| Wales | £210,000 | £147,000 | £63,000 | 43% | £200,000 | £143,250 | £56,750 | 40% | -£6,250 | -3.2% |
| North East | £163,000 | £125,000 | £38,000 | 30% | £157,000 | £125,000 | £32,000 | 26% | -£6,000 | -4.8% |
| East Midlands | £250,000 | £135,000 | £115,000 | 85% | £243,000 | £135,000 | £108,000 | 80% | -£7,000 | -5.2% |
| England and Wales | £305,000 | £225,000 | £80,000 | 36% | £300,000 | £211,250 | £88,750 | 42% | £8,750 | 6.5% |
Leasehold and Freehold house price data sourced from the Land Registry Price Paid data set
for transactions to have completed between January 2022 and December 2022 versus January 2023 and December 2023.
Analysis is based on PPD category A sales (primary not secondary) and excludes any property listed by type as ‘other’.
About the Author
Established in 1958, Benham and Reeves is one of London’s oldest, independently owned property lettings and sales agents. With specialism in residential sales, corporate lettings and property management in prime areas of London, the company operates from 21 prominently located branches and 14 international offices.View all posts by Benham & Reeves