There are a number of differences between freehold and leasehold properties. Although this may seem like technical legal jargon, you need to know whether your property is freehold or leasehold. This makes all the difference between having a landlord and owning your home outright. Read on to learn more:
Essentially, there are two main forms of legal property ownership: leasehold and freehold. Although estate agents gloss this over, the difference can be between homes that are worth buying and those that are not. If you do not sort things out at the purchase stage, you might end up regretting your decision. Additionally, getting it wrong might prove to be expensive to you in the future.
People who own freeholds own the building plus the land on which it stands. This ownership is outright and goes into perpetuity. The title will be registered under your name at the land registry as a freeholder who owns the title absolutely. As you can probably tell, freehold is the preferred option for most home owners, and you can’t really get it wrong. Most whole houses are typically sold freehold.
As a freehold owner, you don’t have to pay annual rent on the ground, maintain the building or get charged. Of course, you will still need to maintain the building’s fabric, including the outside walls and the roof.
Leasehold, on the other hand, refers to a situation in which you only get the lease from an actual freeholder (who is typically referred to as the landlord). You will be allowed use of the property for a given number of years. Most leases are long term – between 90 to 999 years. However, some can be as short as 40 years.
Leaseholders make a contract with freeholders, where they set down the legal responsibilities and rights of each party. Freeholders will have to maintain the building and its common parts (staircase, entrance halls, etc) as well as the roof and exterior walls. On the other hand, the leaseholder can claim their right to manage, meaning that such responsibilities will fall to them.
Finally, as a leaseholder, you also have to pay annual ground rent, maintenance fees, buildings insurance, and service charges, among others. Should you wish to undertake any major works on the property, you would be required to seek permission from the freeholder.