Freehold v Leasehold. Make sure you know what you are buying.
6th September 2019 by Kerry Parsons
If you are thinking of purchasing a property, it is vital you know what tenure it is as this can affect both its value and re-sale. The tenure refers to the different ways you can own a property, the most common of which are Freehold or Leasehold. There is a rarer type, Commonhold, however this will not be covered here.
Below we answer a few common questions which should help clarify the basic differences between Freehold and Leasehold.
What do I actually own?
With a Freehold property, you own the building and the land it stands on outright. With a Leasehold property you have a lease from the Freeholder or Landlord to use the property for a specified number of years. Leases are usually long, running from 99, 125 or 999 years.
Are there any restrictions on the property?
With a Freehold property there may be certain restrictions or covenants written into the title deeds that state what you can or cannot do with the house or land under particular circumstances, however a Leasehold property is likely to have more restrictions or covenants in the Lease such as not being able to sublet the property, or being allowed to keep any animals.
Make sure you read the Lease carefully to understand the restrictions.
Will I need to pay any additional on-going charges?
With a Freehold property, there is no ground rent or service charges. With a Leasehold property you will generally have to contribute towards the cost of maintenance of the building and any communal areas as well as often paying the Landlord a ground rent each year
It is important that you fully understand all costs payable for the property before you commit to purchase it.
Will I be responsible for maintaining the property?
If you own a Freehold property, you will be responsible for maintaining your own property, the roof, outside walls and land at your own cost. If you own a Leasehold property, you will normally only have to maintain the inside areas of the flat, the Landlord will manage the maintenance of the building and common areas with flat owners paying towards the costs.
Can I make any changes to the property?
If you own a Freehold property you can generally carry out any changes as long as you observe any covenants on the title deeds and obtain the usual planning permission and/or Building Regulation approvals. If you own a Leasehold property will usually also have to obtain permission for any works done to the property from the Freeholder or Landlord.
What is a Share of Freehold?
This applies to when the Freehold of the building or land on which the property is built is owned by a company whose shareholders are the owners of the flats in the building. There will be a Lease for the property itself as you are buying a Leasehold property, but in addition you will become a shareholder in the Freehold management company. This is where the term “Share of Freehold” comes from.
How to find out the tenure of a property?
If a property is registered, the Land Registry will hold a record of the tenure of a property, otherwise your Conveyancer can check the title deeds and tell you if a property you are considering is Freehold or Leasehold and if there is also any share in the Freehold.
Any other questions?
Please do get in touch with Kerry Parsons at firstname.lastname@example.org or on 01202 743286 at our Parkstone office or any of the team who would be happy to assist.