Freehold or Leasehold?

Both freehold and leasehold properties come with positives and negatives.

Flats and apartments are mostly leasehold, while houses are usually freehold. However, the number of houses that have been sold as leasehold has risen in the last few years.

Leasehold

A leasehold property is one which is bought in contract with a freehold owner. If it is an apartment, this freeholder owns the land and/or building, and the leaseholder owns the property for a contracted amount of time. This is usually 99-125 years, and is maximum 999 years.

Owning a leasehold property may bring long-term issues (such as unexpected high increases to ground rent, service charges, and management fees) or more pressing issues. For example, a large tower block of apartments recently caught fire very quickly due to highly flammable cladding. If such cladding has been used, this may affect the property’s resale value. Depending on the boundaries outlined in the contract, the leaseholder may also be restricted with what renovations they can carry out.

On the other hand, there is a large possiblity that a leasehold property will not have many problems. If there are, you can raise these issues with the block management company who can organise a solution so you don’t have to.

Freehold

If you’re looking for creative flexibility and security in a property – whether it is your own home or an investment – then a freehold property is more suitable. Once it is yours, you can tailor your property to your own taste. Sometimes, this requires planning permission.

However, most freeholds are houses, so they will naturally cost more in the beginning. Additionally, maintaining the property will be the owner’s responsibility (including outdoor areas) which will take more time and effort.

Thanks for reading!

Feel free to comment on the posts or contact us if you have any questions.