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Freehold and Leasehold Properties – Advice for Buyers

If you’ve been looking for a property to purchase, you will probably have encountered the terms Freehold and Leasehold already. There are big differences between Freehold and Leasehold properties, and it can make a huge difference in the long term, so it’s incredibly important that you are able to make an informed decision on whether to proceed with your property purchase.

If a property is Freehold, this means that the owner owns the property outright, for an unlimited term. There are usually fewer restrictions on what can be done with a Freehold property than on a Leasehold property, which is subject to a Lease for a certain number of years. After the term of the Lease has expired, ownership of the property reverts to whoever owns the Freehold title out of which the Lease was granted. If there is a short time left on the Lease, you could find it more difficult to sell the property, and many mortgage lenders will refuse to lend on properties with shorter Leases.

For this reason, you should find out how long is left to run on the Leasehold title as early as possible, and you should also establish who owns the Freehold title. It is quite common, in the case of Leasehold houses, to find that the Freehold title has been bought by the Leasehold owner, in which case the term of the Lease is less of a concern. In these cases, it is essential to ensure that the Freehold title is also transferred when the sale completes.

While it is common to see Leasehold titles for flats and apartments, it is also quite common to find Leasehold houses. In the case of flats, the Lease is extremely important for ensuring that the owners of individual properties comply with obligations that benefit all of the individual owners, such as contributing to the repair and maintenance of common areas, and also often ensures that the owner of the Freehold title adequately insures the building.

Leasehold properties also often come with additional costs such as an annual “service charge” which commonly covers the property’s share of the costs of maintaining common areas, accountant’s fees, insurance and the managing agent’s fees. You may also be expected to pay annual “ground rent” to the Freehold owner or their representative.

Ordinarily, you would not be expected to pay rent or annual service charge for a Freehold property, although some housing estates do include common areas such as a play area or parking bays, in which case a management company is usually set up to collect the charges from the property owners.

It’s just as important to examine the legal condition of a property as its physical condition and taking the time to do so now might save you time and money in the long term. This article is intended for general information purposes only and should not be relied upon in place of specific legal advice. Please don’t hesitate to contact our experienced Conveyancing team for advice and assistance.


Kim Johnson

About the author

Kim Johnson

Kim is a Conveyancer based at our Durham office.

TMJ Legal Services

TMJ Legal Services has been helping individuals and businesses since 1986. We offer a range of advice and services. 

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