Freehold VS Leasehold
When looking for a new home it’s important to understand what everything means. So, what’s the difference between freehold and leasehold properties?
Freehold
A freehold property is where the owner of the home also has indefinite ownership of the land. The land refers to the place where the structure such as the house is built on.
The benefits of a freehold property is versatile including having full control over the property. When purchasing this type of property you will also be completely rent free. Your ownership of the land also doesn’t expire. This will be whether you home is a new build or apartment.
Your home and the land it sits on may also be easier to sell in the future. Although freehold properties have their benefits they can also be initially more expensive. These properties have a higher purchase price making them less affordable for the likes of for first-time buyers.
Another downside to freehold properties is the maintenance work and time you’ll need to dedicate tot he land. This includes repairs and other significant costs.
The freeholder will always be responsible for maintaining their land and property. In urban areas such as large towns and cities it may be hard to find these types of properties. This is as a result of land availability.
Older homes, such as those you can purchase resell, will often come with a freehold.
Leasehold
A leasehold property is a where the homeowner has the right to use the land but on a time limit. The specified time is outlines on a lease agreement when the home or building is purchased. The agreement will also state the amount of ground rent the homeowner is meant to pay. A leasehold property often also comes with service charge.
Although this type of property has it’s monthly costs it can be initially cheaper. The value of a leasehold home is often reduced. This is as you will need to pay either a monthly or annual ground rent.
Leaseholders will often need permission from the freeholder to make any modifications or renovations to the land/property. This can become an issue or often be restricting to your home.
During the purchase of a leasehold property there may also be solicitors concerns depending on the time remaining on the lease contract. If there is a short time (often under 50 years) the solicitor may raise concerns. This is to protect the buyer from any disputes. If the lease has a short amount of time remaining it can often be expensive to gain a lease extension.
As the term of the lease decreases so can the property value. Often leaseholders can gain the opportunity to buy their freehold. This can boost the property value immensely.
How to choose
If you’re on a low budget when purchasing your new home a leasehold property might be right for you. However if you’ve got more finance room and are looking for flexibility and full ownership a freehold property will fit you better.
