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If you’re buying property in the UK, it’s essential that you understand the difference between a freehold property and a leasehold property. We’ve covered the fundamental differences below.
A freehold property grants the homeowner full ownership of the building, its land and the space above the property. Most houses in the UK are freehold properties. Owners of freehold properties are responsible for the entire maintenance of the building and the land it sits on, but they don’t have to pay ground rent or service charges.
Buying a freehold property typically incurs lower conveyancing fees than purchasing a leasehold property. This is because the ownership contract is much simpler for freehold properties.
A leasehold property grants ownership of the property but not the land it sits on, or even the structure of the building. The landlord owns the land or the building structure. This is most common in a block of flats.
Owners of leasehold properties typically pay ground rent, service charges and maintenance fees but the landlord is responsible for maintaining the building structure and common areas, such as a building foyer or lift.
The lease usually refers to the length of time the owner has a lease of the property or land the property is built on, which is initially 99 or 125 years but can be less if it hasn’t been renewed recently. You must pay (often significant amounts) to have a lease renewed, but laws on leaseholds have recently changed in favour of leasehold property owners (The Leasehold Reform 2022). Owners do have a right to extend their lease but may wish to seek legal advice as part of the process.
The lease length is stated within the lease document, which will include other details such as:
As part of the Leasehold Reform Act, commonhold properties were introduced as a potential alternative to leasehold properties. This is where each flat owner is the freehold owner of their flat and collectively all property owners are the owners of an association that manages the maintenance of the building. However, there are few examples of commonhold leases in the UK.
The main differences between freehold and leasehold properties are:
A property valuation is a projected value of a property in the current market.
What will property prices do in the UK in 2023?
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