When buying a property in England and Wales, there is an important question that you should ask – is the property freehold or leasehold?
The differences between a leasehold and freehold property
What is freehold?
If you buy a freehold property, you’re purchasing the property and the land it sits on for an unlimited period of time. You will be the owner until you decide to sell it or transfer the title to someone else.
What is leasehold?
In contrast, if you buy a leasehold property, you’re purchasing the property and not the land it is built on. The land it is built on will be owned by the freeholder. There will be a lease that contains details about the ownership of the property. You will own the property for a specific amount of time. Once the lease runs out, the ownership of the property reverts back to whoever owns the freehold.
Pros and cons
Some advantages of buying a freehold property include:
- You have complete ownership of the property and the land – as long as you keep up with any mortgage payments and obligations.
- You won’t need to obtain consent from anyone if you want to carry out any extensions or alterations (but please consider that planning permission and building regulation approvals may be required from the Local Authority).
- You won’t have any additional ground rent, service charges, or admin fees to pay to a Landlord.
Some advantages of buying a leasehold property include:
- The landlord usually is responsible for repairing and maintaining the building and any communal areas, and arranges building insurance. There will be less responsibility on you.
- Leasehold properties can be cheaper than freehold properties.
- Leasehold properties are usually flats, and so might be more suited for your individual circumstances.
Some disadvantages of buying a freehold property:
- You will be responsible for the costs of repair and maintenance of the property, and for arranging any building insurance.
- Freehold properties tend to cost more because you will own the land as well as the property.
Some disadvantages of buying a leasehold property:
- You will have to pay rent and service charges to the Landlord for the term of the lease, in addition to any mortgage payments.
- There are likely to be restrictions on whether you can make any alterations to the property. You may need to obtain the landlord’s consent before carrying out any alterations.
- There is usually a list of additional restrictions that you will need to comply with, such as not being allowed pets, or not running any business from the property.
- You will only own the property for as long as the term of the lease. You will need to consider how long is left of the lease and it may be harder to sell the property, the shorter the term left on the lease.
Comment
There are many other factors that you should consider when buying a property, and the above are just a few examples. At Nelsons, your conveyancer will be able to provide you with thorough guidance on the property that you are purchasing.
How can we help?
Rachel Maxwell is a Senior Associate in our expert Residential Conveyancing team.
If you have any queries in relation to this article, please contact Rachel or another member of the team in Derby, Leicester, or Nottingham to discuss your circumstances.
Please call 0800 024 1976 or contact us via our online form.
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