Freehold & Leasehold property

Freehold & Leasehold

When you are looking to buy a property, you will certainly have heard the terms ‘freehold’ and ‘leasehold’ being discussed. These are important definitions to be aware of - essentially, freehold and leasehold are terms for two types of ‘property tenure,’ or the different legal arrangements by which you can own a property. 

If you own a freehold, you own the property outright. however, if you own a leasehold, you have the right to use the property for a fixed number of years (lease), but it is ultimately still owned by a landlord (the freeholder). 

It’s the difference between owning a property outright and having a landlord, and buyers who ignore this distinction, can end up regretting it.
"Depending on whether you buy a freehold or a leasehold property, there may be limits on what you can do to your own home."

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FAQs

Got a question? We’re here to help.
  • What is the difference between a freehold and a leasehold property ?

    The freehold term means that simply you own the property, typically with houses but with some estates there is an obligation to contribute to maintenace of your surrounding area.


    A leasehold property is typically a flat or maisonette and it is yours for the duration of time specified in the lease. You are granted the right to live in that property and have to pay an annual ground rent. The lease defines the extent of the property and rights and also obligations you may have for whom is responsible for its maintenance.

  • Benefits of having a freehold ?

    Don't worry about your lease running out, as you own the property outright.

    You won't have a landlord or Freeholder

    You wont have to pay ground rent, service charges or any other landlord charges.

  • Owning a share of the freehold

    In some cases you can buy the freehold from the landlord along with other leaseholders, so you can manage it together.


    You are able to do this if, at least half of the leaseholders agree to buy a share.


    Doing this gives you more control over the property and how the costs are shared.



  • Commonhold properties

    Commonhold is a type of freehold ownership.


    It is to help flat owners, get complete ownership of their property instead of it being on a lease. All the occupants/ owners of the property comes together to form a company, this is called a Commonhold Association.


    That company then owns the freehold of the building and is managed within its control.

  • What is a leasehold ?

    With most leaseholds, you own the property thart are subject to the terms of the lease agreement with the freeholder.

    When the lease ends, ownership then returns to the freeholder, at this point you may want to extend the lease.


    Majority of Flats and Maisonettes are owned leasehold, so while you may own your property in the building, you have no claim in the building it resides.


    Some houses are also sometimes sold on leaseholds. In this circumstance you own the property, but not that land it sits on.

  • What to ask when buying a leasehold ?

    You need to consider many factors when buying a leasehold, before you take over the lease from the previous owner.


    So consider the following information carefully


    • How many years are left on the lease ?
    • What is the budget for service charges and other costs ?
    • Can these costs be increased overtime ?
    • How will the duration left on the lease affect getting a mortgage or resale value in the future ? 
  • Is the length of the lease important ?

    If the lease is for less than 70 years, some mortgage providers might not want to provide a mortgage. Typically lenders would like the lease to run a number of years after the mortgage has ended 


    If you want to eventually sell your leasehold property in the future, think about how many years of lease would be left and the affect on its property value.

  • Extending a lease ?

    You can request that the landlord extend you lease and once you have owned your home for two years, you have the right to extend the lease by 90 years, providing you are a qualifying tenant.


    To be a qualifying tenant, your original lease will need to be for more than 21 years.


    There will be a cost to be paid for extending the lease and the cost will depend on a number of factors.


    If the freeholder cannot agree on the cost of extending the lease,  you have the option in appealing to the Leasehold Valuation Tribunal.

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