My First Property

What Does Freehold Mean When Buying A House?

When looking to buy a property, one of the most important things to consider is whether the property is leasehold or freehold. But what exactly does freehold mean when buying a house?

What is freehold?

Freehold means when you buy and own a property, you also own the land it is built on. You are responsible for them both, and there is no limit to the time in which you own them. The owner of a freehold property can use the land for any purposes, providing planning permission is obtained in accordance with local regulations.

Sale of a freehold property does not require consent from the landowners, and therefore requires less paperwork. This tends to make freehold more expensive than a leasehold property, but not so much to counteract the benefits.

How long does a freehold last?

There is no time limit on the length of a freehold ownership. Once you own the land, you own the land. Freeholds can also be inherited by any heir if you so wish.

How do I obtain the freehold of a leasehold property?

If you own a leasehold property and desire to own the freehold and the land that comes with it, there are two main ways to do this.

Informal route

If you are currently a leaseholder, you can ask your landlord to sell you the freehold at any time. However, this does not necessarily mean that the land owner is obliged to. If they are happy to sell it to you, then starting the process informally (avoiding a tedious legal process) can save you money in the long run.

Formal route

Under this route, the freeholder and the leaseholder need to follow a strict procedure set out in the law. This route offers more protection to a leaseholder if the parties cannot not agree to the terms and / or price. Leaseholders can, in this case, apply to the Tribunal to decide on the issue.

What fees are involved in buying a house as freehold?

When you buy a house as freehold, since you are also purchasing the land, the purchase can sometimes cost more. However, you are likely to save money in the long term, as you are avoiding the need to pay ground rents, service charges and administration fees, which are all requirements of leasehold properties.

During the process of buying a freehold property, it is vital that you thoroughly research the property before you purchase. Since you will own the land as well, we recommend hiring a chartered surveyor to thoroughly assess the property and check for any issues or occurrences with the nearby land that you should know. Having a homebuyer survey completed can be fairly costly, but doing so will ensure you protect your investment in the long term.

The advantages of a freehold

The main advantage of purchasing a freehold property is that you have complete control over it. This means the only payments you are obligated to make are the mortgage, insurances and upkeep of the property. No ground rents, service charges or contributions to work being done on the property. Another byproduct of this is that there is no other party who has a say in what is done with the house, and therefore, no limitations or restrictions on what you are permitted to do, within reason of course!

You also own the property forever, so you can rest assured that you are in a secure situation, and will not have to worry about your lease coming to an end. This means you can also leave it to your family in your will, which brings us to perhaps the biggest benefits of buying a house as freehold. A freehold property is an investment. Not only will the house increase in value over time, so will the land it sits on.

The disadvantages of a freehold

There are relatively few downsides of holding a leasehold, and the benefits definitely outweigh them. The main disadvantage is that the initial purchase can be slightly more expensive, even though the process is more streamlined. Freehold property only generally comes with houses rather than flats, as flats are generally only sold as leasehold.

This is because purchasing the freehold of a flat would mean purchasing the land, which is also used by other flats, so the land would never really be solely yours. One of the ways that freehold is applicable to flats is with shared ownership of the freehold. This means that the land is jointly owned between the other freeholders of the building, so is never completely yours.

If you prefer communal living, such as being in an apartment complex with a gym or a concierge, a freehold is probably not for you, and probably a lot more difficult to obtain.

Share of freehold explained

As mentioned above, it is possible to buy a share of freehold for a flat, but what does this mean? In some cases, you may be able to own a share of freehold if you are buying one or more units within a block of flats.

Some flat owners even join together to set up a company to manage the building, with each person owning a specific number of shares in that company. This gives flat owners a say on how the building is run.

An association is set up to manage communal areas of the building, with the collective owners of the building being divided into shares. Those leaseholders who own the freehold who do not want to get involved in the extra work can appoint a managing agent to deal with the maintenance, if all leaseholders are in agreement.

Though you might have more say in the upkeep of the building and land, you might also find yourself at odds with the neighbouring leaseholders when it comes to arranging repairs work and paying for it. As you can see, this could get a bit complicated, so it is worth doing your research before you consider it.

In Summary:

  • Freehold means when you buy and own a property, you also own the land it is built on.
  • There is no time limit on the length of a freehold ownership.
  • There are large fees involved in freehold buying, but in the long run it will be cheaper.
  • You have complete control over the property with freehold.
  • You are able to own a share of freehold if you live in a flat.


More first-time house buying articles:

  1. Pros & Cons of Buying Property at Auction
  2. The Complete First Time Buyers Guide
  3. Securing Your House Purchase
  4. Budgeting & Saving Tips
  5. What is the Criteria for a Buy-to-Let Mortgage?

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