Buy a Freehold or Leasehold?

A question I often get asked is, what is the difference between Freehold and Leasehold?

It is a simple question once you know how it works.

A freehold, is when the Freeholder is the owner of the LAND and the Property itself.

A leashehold, is when the Freeholder (The person who owns the land and the property), effectively RENTS out their property to a Leaseholder (The person leases the building, or a flat in a building). Leases will 100 years or more are ideal, as anything shorter and the bank will struggle to sell the property if it repossesses it.

Flats are especially confusing, but they are almost always leaseholds.

Houses are not always Freeholds, they can be leaseholds too, (where the Freeholder, leases the property and the land it sits on to the Leaseholder for a "Ground rent") Freeholds usually come with 999 years or more.

What things should I consider when deciding?

Most leaseholds using come with the following:

Service Charge, Management Fees, Ground Rent. These are fees that are paid to the Freeholder or a Management company, usually for maintaining the building.

Ground rent, can sometimes be as low as £1 a year, and is usually a "nominal fee".

If you want to buy a Freehold or Leasehold, feel free to contact us.

Always Wright Mortgages.