• 1
  • 2
  • 3
  • 4
  • 5

Freehold Vs Leasehold : What’s the Difference?

A lot of people wonder what the main differences are with freehold and leasehold property, where the line is drawn on certain matters and which is better. This article discusses this in more detail.

It takes an average of eight weeks to complete the legal process from pre-contract enquiries to completion.

It is important to find out who really owns your property.  Is your property Freehold or Leasehold.  Freehold means the property is entirely yours; you legally own the property and are fully responsible for the fabric of the property.

Leasehold means you have bought a lease which entitles you to live in the property for a certain length of time.  You don’t actually own the property; you only own the right to live there for the period of time stated on the lease.  The real owner is the person who owns the freehold.  Leases can be relatively short or as long as 900 years.  The leasehold eventually relapses back to the freeholder when the term expires, unless you pay more to extend it.

Short leases can be good value, however banks are reluctant to lend if a lease is less than 70 years.  A short lease is a depreciating asset; therefore long leasehold is preferable.

When you buy leasehold you have to abide by the terms of the lease.  You will have to deal with the following:

  • Legal obligation to pay ground rent to the freeholder
  • Pay a set share of the service charges towards the maintenance of the building
  • You have to keep up with regular decoration of the property, e.g. every 3 years
  • You can’t sub-let without permission
  • You may also not be allowed to do certain things, such as, keep a pet, install carpets, paint a certain colour etc

Most people prefer freeholds to leaseholds.  If you have a lease hold, it is important to make sure that there is a clear freeholder’s documentation in places so that rules can be enforced.

Leave a Reply