- 26 January 2023
Posted: 13 September 2022
Buying a freehold or leasehold property can raise many questions. Who owns what? Who is responsible for what? Who pays what? It is essential you understand the differences before you buy a property.
When buying freehold property, you are buying the bricks and mortar but also own the land that it is sitting on. This is straightforward and very common if you are buying a plot of land with a house on it.
You’ll have complete ownership of the property and land. You have complete flexibility with what you do with your home, for example, having pets, making home improvements, with permissions of the local authority or council.
The initial sale price could be more. Freehold properties tend to be houses rather than flats, so it you are looking for a flat this could limit your choices. You are responsible for the upkeep of the whole property and for paying buildings insurance.
With leasehold property, you are buying the bricks and mortar but not the plot of land that it is sitting on. This is most often the case when, for example, you purchase a flat which sits above others, situated on the same portion of land. Alternatively, a property might be sold with a leasehold simply because the freeholder wishes to retain their interest in the land. Once the lease runs out, ownership of the entire property will revert back to the freeholder.
Leasehold properties tend to be a cheaper alternative in home ownership. However, this is due to the risks involved. The freeholder usually manages all maintenance for the building and communal areas and deals with buildings insurance.
Leaseholders need written permission from the freeholder to change the property, which may involve large fees. You may not be allowed pets. The fewer years left on the lease, the harder it will be to sell the property, so you may not benefit from increasing property prices. Other costs apply including ground rent, service charges and buildings insurance.
The decision to buy a freehold or leasehold depends on your personal circumstances. You need to decide your budget and the type of property you want to own. Take time to calculate the costs involved for the duration you want to be living at the property.
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- 26 January 2023
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