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Freehold v Leasehold. Make sure you know what you are buying.

6th September 2019 by Kerry Parsons

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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 k.parsons@laceyssolicitors.co.uk or on 01202 743286 at our Parkstone office or any of the team who would be happy to assist.

Kerry Parsons

Associate — Residential Property

Direct dial: 01202 307869

Email

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Please note Kerry is currently on maternity leave so please contact John Munro, head of residential Property, who will be able to help with your enquiry. 

Kerry is an Associate in our Residential Property department based in Parkstone, with her experience spanning over 12 years. Kerry has worked for two local authorities in Dorset as well as within private practice and she now specialises in Residential Property matters including purchases, sales, remortgages, transfers of equity and other property matters including Declaration of Trusts, adverse possession claims and ownership queries.  Kerry became a Fellow of the Chartered Institute of Legal Executives in 2017 having completed the Diploma in Law and Practice (degree level) over 7 years alongside working full time in the legal sector.

Kerry prides herself on being friendly and approachable with a ‘can do’ attitude and really enjoys the fast pace of Conveyancing. There is no matter too complicated and Kerry enjoys problem-solving as is often required on many property matters.

Away from the office, Kerry enjoys spending time with friends and family outdoors and can often be seen out and about with her dog Baxter (and husband!) enjoying some fresh air.  Kerry also joins in with many charity events along with her lovely colleagues.

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