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Freehold vs Leasehold: Understanding the Differences

Updated: Sep 17, 2023


 
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Are you considering buying a property in the England and Wales? Confused about whether to buy a freehold or a leasehold property? If yes, then you are not alone. Many people find it difficult to understand the differences between freehold and leasehold properties. In this comprehensive guide, we will explain everything you need to know about freehold and leasehold properties.



What is Freehold?


Freehold is a type of ownership where you own the land and the property outright. This means that you have complete control over your property and the land it stands on. As a freeholder, you are responsible for all maintenance and repairs of the property and the land.



What is Leasehold?


Leasehold is a type of ownership where you own the property, but not the land it stands on. The land is owned by a freeholder, and you have to pay ground rent and service charges to the freeholder. The leasehold ownership is for a fixed period of time, usually between 99 to 125 years.



Differences between Freehold and Leasehold


The main difference between freehold and leasehold is the ownership of the land. With freehold, you own the land and the property outright, while with leasehold, you only own the property. As a freeholder, you have complete control over your property, and you can make any alterations or modifications to it. On the other hand, as a leaseholder, you have to seek permission from the freeholder to make any changes to the property.


Another difference between freehold and leasehold is the duration of ownership. With freehold, you own the property and the land for an indefinite period. With leasehold, you only own the property for a fixed period, after which the ownership reverts to the freeholder.



Rights and Responsibilities of Freehold and Leasehold


As a freeholder, you have the right to do whatever you want with your property. You can sell it, rent it out, or live in it. You are also responsible for maintaining and repairing the property and the land.


As a leaseholder, you have the right to occupy the property for the duration of the lease. You also have the right to challenge any service charge or ground rent increases that you consider unreasonable. However, you are responsible for paying ground rent and service charges to the freeholder, and you may have to seek permission from the freeholder to make any changes to the property.



Pros and Cons of Freehold and Leasehold


Freehold:


Pros:

  • Complete control over the property and the land

  • No ground rent or service charges to pay

  • No need to seek permission for any alterations or modifications


Cons:

  • More expensive than leasehold

  • Responsible for all maintenance and repairs of the property and the land


Leasehold:


Pros:

  • Lower upfront costs

  • Ground rent and service charges usually cover maintenance and repairs of common areas

  • Less responsibility for maintenance and repairs


Cons:

  • Limited control over the property, as the freeholder has the final say on any changes or modifications

  • Ground rent and service charges can increase significantly over time

  • Leasehold ownership is for a fixed period, after which the property reverts to the freeholder

If you are unsure about your property ownership, at Land Registry Online, we offer a Title Register service that allows you to easily obtain this information. Simply select the desired documents, complete your details, and you will receive your documents by email within a few hours.



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