Freehold & Leasehold Property
As a first-time house buyer, there is a lot of jargon to wade through. One of the terms that will crop up time and again are the words freehold and leasehold. Whether you are buying a house or looking at flats, or indeed any type of property purchase, it is important to know what they are and how they differ.
Freehold properties, put simply, mean that you own the house when you buy it, and indeed the land that the property sits on. It's all yours! Whatever amendments you want to make, you are free to do (obviously within planning laws and regulations etc!)
The majority of properties that fall under the freehold category are houses; although it is possible for a flat to be freehold, this is pretty rare - they are much more commonly leasehold, which is where you'll tend to come across that term.
Leasehold properties differ significantly from this freehold idea. When you purchase the property - say, a, flat - you buy the RIGHT to live in the property for a given amount of time, so, as strange as this sounds, you don't actually become the OWNER of the property at all! You will typically have a ground rent to cover maintenance costs, and there'll be documentation with the lease that explain how the service charges are calculated and spread out.
What happens when the lease is up?
A very common, and sensible question, that those who learn about leasehold ask is exactly that - what happens when the lease is up? The answer is that the property is returned to the landowner. Now, the length of most leases tends to be 99 years, but if you are buying a leasehold it's critical you find out how long the lease is - clearly a short leasehold period will greatly impact on the value of the property.
If you purchase a leasehold property, then bear in mind that it might be possible to purchase the freehold but there will of course be cost attached to that which may be considerable!
More first-time house buying articles:
- Can I Take Photos When Viewing Property?
- Pros & Cons of Living in a Flat
- Types of Property Ownership in the UK
- What is a Fixed Rate Mortgage?
- Pay Rent? Get Affordable Contents Insurance