Two of the most important terms to understand when buying a home are freehold and leasehold.
These days, most houses in the UK are sold freehold. This means that you own the property and the land it stands on. With a freehold property you are free to do as you wish with it (with the local planning regulations) and you bear sole responsibility for its upkeep. The control and authority which comes with a freehold property, of course, comes with a price – freehold properties tend to be more expensive than leasehold properties. But once that money’s paid, the house is yours to do with what you wish.
– The property is yours.
– You are able to make any changes that comply with the local planning regulations.
– Should you wish to sell, the property will be worth more than it would if you were selling a leasehold property.
– Freehold properties are often more expensive.
– Any issues which arise are your problems to deal with, and you are solely responsible for the property’s upkeep.
With a leasehold, rather than purchasing the property itself, you purchase the right to live within that property for a certain amount of time – anywhere between 90 and 900 years. If and when you sell, you sell your right, and the leasehold countdown continues. For example, if you bought a leasehold property with a tenancy of 100 years, and sold 10 years later, the new buyer would have a leasehold of the remaining 90 years.
Most flats or apartments are leasehold but houses can be leasehold too. When buying a leasehold, you are buying your share of the building and the space within it but not the structure, building, or land itself, which belongs to the freeholder. An agreement will be drawn up between the tenant and the landlord to determine responsibility in terms of property maintenance, upkeep, repairs, insurance and the like.
When buying a leasehold property you are also required to pay an annual rent to the freeholder, for your share of the property.
– Leasehold properties are usually cheaper than freeholds.
– Maintenance and upkeep of the property id usually the landlords responsibility
– Insurance is sometimes included in maintenance costs.
– Additional costs such as maintenance fees and annual rent.
– Solicitors often charge higher rates when dealing with leaseholds.