The Differences Between Freehold and Leasehold

When it comes to purchasing a property, some of the terminology can appear complicated especially the nitty gritty details of the property itself.

When you are on the hunt for your new home, whether this is the first property you are buying or the next one, it is important you know exactly what to look for.

For example, Freehold properties VS Leasehold:

A Freehold property is a property you own and also the land it sits on. If the property has a garden and a driveway, you will own this land as well as the property you are living in.

On the other hand, a Leasehold property is a property you own but you do not own the land it sits on. As part of the lease agreement you may incur services charges for things such as the upkeep of a car park or communal areas or gardens.

When you purchase a leasehold property, you own it for a specific period of time, which is the term of the lease. Once the term of the lease expires, the ownership of the property transfers to the person (or entity) that owns the land – the freeholder.

Like anything there are pros and cons to living in both.

Pros of purchasing a Freehold property

• You are able to do whatever you’d like to the property without seeking permission from a leaseholder.
• You aren’t subject to any ground rent or service charges.
• You are able to live in the property for as long as you’d like.

Cons of purchasing a Freehold property

• You own all the responsibility for any repairs or maintenance that needs carrying out on the property.
• Freehold properties are usually more expensive that leasehold properties.

Pros of purchasing a Leasehold property:

• You are not responsible for any repairs or maintenance of the grounds – if there is a problem it is down to the freeholder to fix it.
• Can be cheaper to purchase

Cons of purchasing a Leasehold property:

• You may encounter some restrictions within the property for example, having pets and any building work you wish to carry out.
• There may be additional costs for the maintenance of things such as gym area, car park, communal gardens and cleaned areas of the property.
• After a certain amount of time you may have to renew the lease of the property.

 

It is important to establish which kind of ownership of the property will suit your buying needs and requirements, what works for some buyers may not work for others! You might like the idea of someone else looking after your garden for a fee however others might have green fingers and want to maintain their garden a certain way themselves.