Freehold and Leasehold

We know that when buying a new home, you'll sometimes stumble across terminology which may seem unfamiliar, such as the terms "freehold" and "leasehold".

However, understanding the difference between freehold and leasehold is extremely important, so we're going to break it down for you in our handy guide.

• If you buy a freehold property, you'll own both the property (building) and the land that the property sits on for an unlimited period of time. 
• You will own the property, until you decide to sell it to someone else.
• Houses tend to be sold as freehold properties, but it is not uncommon common to come across leasehold houses particularly on residential housing estates. 

• If you buy a leasehold property, you'll own the property (building) for a fixed period of time, but not the land that the property sits on. 
• Ownership of your property is also for a set period. Technically you actually own a lease, which permits you to occupy the property. 
• There will be a ‘ground rent’ payable, which is an annual payment paid under the terms of a lease by the owner of a building to the owner of the land on which it is built.
• Once your lease expires, ownership of your property technically passes to the freeholder. You may have statutory rights to extend the length of the lease or, in come cases, to acquire the freehold from the freeholder. There will be a charge for this. 
• The length of the lease will affect your ability to sell the property as many mortgage companies require a minimum unexpired term.
• Apartments and flats are often leasehold property, as there are communal areas, such as hallways and green space. These common areas are usually maintained by the freeholder in exchange for a service charge.