Freehold Verses Leasehold

Understanding the difference between freehold and leasehold: The contract you get about your property purchase may quote that the property is freehold or leasehold. Freehold is much more straight forward than leasehold. If you buy a property on a freehold basis means you own the building and the land and boundaries that the building sits on. So long as you abide by the law you will be able to do pretty much what you like within reason. This goes for most properties within England and Wales.

If you buy a property leasehold then this a completely different kettle of fish. You will find you don’t have the same rights as a freeholder and you only buy the right to live in the property for a fixed number of years but the land belongs to some one else. The lease normally has a length of time. Many have lengths of 99 years to about 999 years. Once the lease has run out the property reverts back to the landlord.

Most mortgage companies will not give a mortgage if the lease is too short as they then have no protection. You will find that because the landlord retains the ownership of the land and the building, an annual service charge will be imposed for the upkeep of the building as well as ground rent.

When it comes to conveyancing, the freehold property is much more straightforward to do. However the leasehold can be a bit more problematic,and remember that most flats and apartments in the UK are actually leasehold. If the lease is at least 40 years or more, most mortgage companies are happy to lend on the property but will rarely lend on shorter leases. Things to look for in the conveyancing are hidden clauses and charges that could effect the value of your investment as you want to make sure that you can live peacefully throughout the term. Make sure your solicitor is good and specialized in this field.

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