Most of us probably have a vague idea of the difference between being a freehold or leasehold property owner, but there are many things to consider before buying either type of property.

What Does Freehold Mean?

If you are a freeholder, you own an entire property and the land it sits on as well as the airspace around it. Land means the actual soil and things such as trees and flowers on it which are laid out on the Land Registry. Any buildings on the land, whether they are fully built, just a shed or derelict, are also yours. The airspace simply refers to what is known as the lower stratum – essentially the air above the property which protects your enjoyment of it.

What Does Leasehold Mean?

A leaseholder is granted a leasehold by a freeholder, which means they don’t own the whole building or land it sits on. This is the case when a building has been split into flats or maisonettes and a lease including terms is granted for a certain period of time. The lease protects the freeholder when the flat is sold, as they retain possession of the part of the building it sits in.

A long-term tenancy agreement, a lease typically lasts from between 100 and 999 years. If you are buying a leasehold property, you need to ensure there is a long enough lease on it, although it is rare for a leaseholder to be evicted, as lease extensions are common.

Legally Binding

Both potential freeholders and leaseholders have to instruct a legal professional known as a conveyancer to carry out the necessary checks on a property and the terms of the agreement. It is a good idea to get a number of freehold conveyancing quotes from law firms such as https://www.samconveyancing.co.uk/conveyancing-quote.

Obligations

A lease sets out the obligations of each party. For example, the freeholder has to agree to maintain the building and allow the leaseholders to live peaceably in it. A leaseholder has obligations such as paying ground rent for the land, allowing workers in to carry out any planned work and paying service charges. According to the government website, you could be taken to court as a leaseholder if you don’t follow the conditions set out on the lease. This could mean you lose it completely.

Becoming a Leaseholder

When you purchase a leasehold property, you will take over the lease from the previous owner, and you should ask your conveyancer to check it carefully, noting how many years are left on it, as this could affect your mortgage application and if any service charges are subject to increase.