Freehold Vs Leasehold

06/11/2017
Deciding whether a freehold or a leasehold is better for your needs depends on a number of different factors; most relate to what you want to do with the property. For example, if you are looking to extend your property then buying a freehold would be better, however if you want to enter the buy to let market in the cheapest way, then a leasehold is better (we go into why later).

Freehold Vs Leasehold: what is the legal difference between a freehold and a leasehold?


What is a freehold?

"...the legal right to own and use a building or piece of land for an unlimited time". Simply put, you own the land and all of the property/ies on it.


What is a leasehold?

"...the legal right to live in or use a building or piece of land for an agreed period of time". Simply put you are leasing a part or all of a building and you don't own the land underneath it.


Not sure whether your property is a leasehold or freehold? You can either check the Land Registry or give us a call and we'll help you find out - 0333 344 3234.

In this article we explain how you can best choose either a freehold or leasehold by considering your intentions for the property as this is likely to be the best way to decide.

If you are buying a home and want to run through your plans then feel free to call us a on 0333 344 3234 or email help@samconveyancing.co.uk. Our clients benefit from competitive legal fees that are covered for sales and purchases under our No Sale No Fee Policy.

Why not run a quote for yourself using our online quote generator?

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Is a 'share of freehold' a freehold?

No. It is a leasehold property where you also own a share of the freehold title. This means that you share the obligations of the freeholder with some of the other leaseholders. Read more about buying a share of freehold by clicking here.

I want to develop my property to make more money

Many people look to buy properties with the intention of extending them, normally to increase the property value and to gain more space. If this is what you want to do, then you're invariably looking at buying a freehold rather than a leasehold.

You wouldn't normally be looking to extend a leasehold property for these 2 main reasons:

  • your lease only permits you use of the 'demised area' within the property (extending would extend out of this); and
  • a leaseholder does not own the ground under their property to extend on it.

Check your lease for the Leaseholder's Covenant to the Landlord
Check your lease to see if this clause is included (most leases include it as standard) ...Not to make any structural alteration to the Premises or to the external appearance thereof and not to make any internal non structural alterations without the written consent of the Landlord (such consent not to be unreasonably withheld or delayed)...

If you want to develop a leasehold property (if it's a case where this is feasible, see above) you need to get freeholder consent to do so but this is unlikely to be granted.

Freeholds are easier to extend and develop as you own the land underneath the property. You should however check the Official Copy of Register of Title as there are some freehold titles that limit the number of properties you are allowed to build on the land involved.

* The Land Registry charge a fee to download this document.

I want a property with minimal upkeep

Having a low maintenance home is something that suits some buyers and if this is the case then maybe a leasehold is better for your needs than a freehold. With a freehold you have to maintain the internal and external parts of the property, including:

  • Garden;
  • Boundaries (fences and hedges);
  • Roof;
  • Drains; and
  • Access drives.

With the majority of leaseholds, it is the freeholder's obligation to maintain the above, although the cost for doing so is shared between the leaseholders. This may seem like a plus for buyers who want to have their property well-maintained but not do any of the work themselves.

I want a cheaper property

As a rule of thumb, leasehold flats are cheaper than freehold houses, however you must factor in the monthly spend on ground rent or service charges. When taking into consideration the money being spent on these costs, you may find that the difference in cost is smaller than it first appears.

I want to buy a house not a flat

Although most houses are freehold, you can still buy a leasehold house. A leasehold house normally has a low ground rent to pay to the freeholder, however you may not have to pay any service charges.

That said, some recently-built leasehold houses have attracted very negative attention as the ground rent payments start very high and can become even more extortionate. Additionally, although the freeholders offer the option to buy the freehold on these properties, once again, the price is eye-wateringly expensive. You can read more about this in the Telegraph's article - Leasehold crackdown for new builds - but existing owners still face £9k yearly bills.

If you are buying a home and want to run through your plans then feel five us a call on 0333 344 3234 or email help@samconveyancing.co.uk. Our clients benefit from competitive legal fees that are covered for sales and purchases under our No Sale No Fee Policy. Why not run a quote for yourself using our online quote generator?


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