What are the differences between Leasehold and Freehold Property?

What are the differences between Leasehold and Freehold Property?

Welcome to our Conveyancing Department blog; we hope that you enjoy reading this and if you have any questions please do not hesitate to contact us on 01243 790532.

With a freehold property, you own the entire property/building.  When a leasehold property is a flat, you only own part of the building whilst the main building itself is owned by a management company or a landlord.   If you are considering buying a leasehold property there are a few factors to think about.

Firstly, there is usually ground rent and service charge fees payable. The fees cover a wide range of services which will be detailed within the Lease; however common things that are included are the maintenance of the main building and common areas and building insurance. If you wish to make structural alterations or additions to your property this will generally need consent from the freeholder and they may make a charge for giving this consent.  There is not an average service charge or ground rent payable so every building is different; it is therefore important that you find out what these costs are and decide if you are happy to pay the fees that they are charging.

The second consideration is that you have a Lease and usually the terms of the lease will be very similar to rental accommodation Contracts, for example, if you like pets, you will usually need to obtain consent from the landlord.  Lease terms vary but it is important that you fully understand your obligations and the obligations of the landlord.

The third element to consider is that leasehold properties have an ‘expiry’ date. This is when the lease will terminate. Some properties have very long leases such as 999 year leases or 99 year lease but, if you buy a leasehold property from someone else, the lease may be considerably shorter than this. The fact that the lease term depreciates with time, means it may be harder to sell in future as people will be wary of buying a leasehold property with less than 70 years left on the lease. You can always request a lease extension with the landlord; however there is a risk that this will be expensive depending on the length of the lease remaining.

Finally,  leasehold properties are a great way to get on the property ladder. A leasehold property is usually cheaper than a freehold property, it is similar to renting a property however you are investing the money that you pay to your mortgage in the same way as a freehold property. If it is your first time buying it may also be very daunting to own your own freehold property and have all of the responsibility that comes with it, whereas having a leasehold property you have a little less responsibility in terms of the building maintenance because the landlord will cover that element of responsibility.

If you have any questions or would like to discuss an issue with one of our conveyancers (Carol Laurence, Richard Ayling or Sara Duymun-Purdie) please do not hesitate to contact us on 01243 790532 and we will be very happy to help.