What is the difference between a freehold and a leasehold property?
The main difference between a freehold and a leasehold property lies in the ownership rights and duration of ownership:
- Freehold Property: When you own a freehold property, you have complete ownership of both the building and the land it stands on. You hold the property indefinitely and have the freedom to make decisions regarding its use, maintenance, and alterations (within legal and regulatory limits). Freehold ownership typically applies to houses and some types of commercial properties.
- Leasehold Property: With a leasehold property, you own the property for a specific period of time as outlined in the lease agreement. The land on which the property is situated remains owned by the freeholder. Leasehold ownership is common in apartments, flats, and some commercial properties. The lease agreement sets out the rights, responsibilities, and duration of the leaseholder's ownership. Leaseholders typically pay ground rent and service charges to the freeholder or managing agent for the maintenance and management of the property.
Key differences between freehold and leasehold properties include:
- Ownership: Freehold ownership provides full ownership rights, while leasehold ownership is for a specified period and subject to the terms of the lease agreement.
- Duration: Freehold ownership is indefinite, while leasehold ownership has a specific duration outlined in the lease agreement.
- Responsibilities: Freehold owners have full responsibility for the property, including maintenance and repairs. Leasehold owners typically have obligations to pay ground rent and service charges and may require permission for alterations or changes.
- Control: Freehold owners have more control over the property and decision-making. Leasehold owners may have restrictions and need to seek permission from the freeholder or management company for certain actions.
When considering a property, it's important to understand whether it is freehold or leasehold, as it can affect your ownership rights, responsibilities, and potential costs associated with the property.