Leasehold v Freehold – Residential Properties
- 1st May 2018
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Freehold – What is it?
The freeholder owns the property and the land outright. It’s the freeholder’s responsibility to manage as well as maintain the property and the land. It is your name in the land registry as “freeholder”.
You will find most houses are freehold.
Leasehold- What is it?
If you own a leasehold property, you effectively have a fixed period of ownership from the property’s freeholder. The lease tells you how many years you own the property. When the lease ends, ownership returns to the freeholder, unless you can extend the lease. When you buy a leasehold property, you’ll take over the lease from the previous owner.
Flats are most commonly owned on a leasehold basis
The Issues of Leasehold
A leasehold property can come with charges and restrictions, which vary from property to property:
Service charges are put in place by landlords to recover costs incurred from maintaining the building. Repairs on the building, maintaining communal areas and exterior walls are examples of what can be charged to the leaseholder.
Ground Rent is a rent payment made by the leaseholder to the landlord as a condition of the lease. It’s the leaseholder’s responsibility to pay the Ground Rent, this must be subject to prior notification from the landlord.
Restrictions can vary, permission for any major works done to the property, not having pets or subletting are a few examples.
If leaseholders don’t fulfil the terms of the lease, the freeholder may be entitled to forfeit the lease.
James Pearn, Partner and Head of Property commented:
“Freehold properties are more desirable, certainly, because they simplify who owns what. In addition, there’re no recurring financial obligations to pay, and you don’t have to extend a lease. Leasehold is certainly a viable option but I recommend checking the conditions and the various charges which are included in the lease.
If you want to find out more, please contact James Pearn. James has over twenty years’ experience as a solicitor, he possesses a wealth of knowledge and expertise in both residential and commercial property.
Call – 029 2080 3120
Email – email@example.com