When you start looking for your first home, you’ll probably notice that the properties are described as being either freehold or leasehold. If you’re a bit baffled as to what they both mean, here’s our quick guide on leasehold vs. freehold.
If you own a flat, you may well own it on a leasehold basis. This means that you have the right to occupy the flat for the length of the lease (which is typically anything from between 99 years and 999 year – i.e. ages). However, technically you don’t actually own the building – just the right to live there. You may have certain obligations to the freeholder, such as paying a set service charge to cover maintenance. Leaseholds are not necessarily a bad thing and plenty of people have them – they just might be a little more restrictive than having freehold/share of freehold and therefore may be considered less coveted by buyers.
This means that you completely own the house and the land it’s on. It’s yours, full stop; no-one else is involved. If you’ve bought a house (rather than a flat) then it’s probably freehold. You are in control and you make all the decisions about what happens to the building.
Share of freehold
This refers to the increasingly common scenario in which the owners of leasehold flats in a building join together and buy the freehold from the freeholder. This is usually a very good thing as it allows the owners of these flats more control and can increase the value of their properties. All members of the freehold will be responsible for sorting out the upkeep of the flat, but they’ll do it on their own terms. So in short, if the property particulars state ‘share of freehold’ it’s typically a plus point.
There is a legal procedure to go through to buy the freehold and certain criteria that must be met. For more information on the process, check out the government information on buying the freehold on your flat.
Check the length of the lease
It’s a very good idea to check out the length of a property’s lease before you put in an offer. Some mortgage providers will refuse to offer a mortgage on a property that has a lease that’s shorter than 75 years. Extending the lease on a property can, in some cases, be extremely costly – so ask the question sooner rather than later. There’s some further information on findaproperty’s beginner’s guide to extending a lease.