Leasehold vs Freehold Property: What’s the difference?
What is a Freehold Property?
When you buy a freehold property, you own the building outright, including the land it is built on, in perpetuity.
When buying a freehold property, you are responsible for maintaining your property and land, so you will need to budget for these costs. You will have the responsibility for maintaining the fabric of the building.an exception to this may be where the freehold interest I subject to Leases that have already been granted and some of the repairing have been altered.
Most houses are freehold but some might be leasehold – usually through a shared-ownership scheme (in some cases a leasehold house may not be acceptable to all mortgages).
You will not be able to share the costs of any major work with other Leaseholders.
There are benefits of owning a freehold house such as:
You so not have to worry about the lease running out, as you own the property outright. You do not have to deal with the freeholder (often known as the landlord).You do not have to pay ground rent, services charges or any other landlord charges. There could (occasionally) be some shared costs with a neighbour e.g. repair of a shared drive.
What is a Leasehold Property?
You will own the property subject to the terms of the lease and for the length of your Lease agreement with the freeholder, with a Leasehold property.
Most flats and maisonettes are owned by way of a Leasehold title, so whilst you own your flat/maisonette in the building, you do not own the whole building or the land beneath it.
When you buy a leasehold property and the Lease has already been granted, you will take over the lease from the previous owner. You should consider:
How the length of the lease might affect getting a mortgage, and the property resale value, the amount of years left on a lease is very important. If the lease is for less than 70 years, you might struggle to get a mortgage. Many people considering buying a Leasehold property insist that the leaseholder extends the lease before they buy it.
How will you budget for service charges and related costs? You might also be asked to pay into a sinking fund, to help cover any unexpected maintenance work needed in the future. Leaseholders will have to pay maintenance fees, ground rent, annual service charges and their share of the buildings insurance
You should also remember that Leaseholders will have to obtain permission for any major works they wish to do in the property. Leaseholders may face other restrictions, such as not keeping pets at the property or a restriction on subletting.
If you own a leasehold property in a block, it is likely that the Landlord will retain responsibility for repairs to the exterior and structure of the building but will be entitled to recover the cost from the flat owners. The Landlords may employ Managing Agents.
How can we help?
At Edwards Duthie Shamash Solicitors we are experts in Residential properties both buying and selling, Leasehold and Freehold properties. When you are looking to buy a property, ensure that you use Solicitors that you can trust, we provide a local professional service that you can rely on at Edwards Duthie Shamash Solicitors.