What’s the difference between a freehold property and a leasehold property? You'll see these terms around when looking for your next home, and it's important to know which is which.
We Living recognise that for first time buyers, guidance and information is key when purchasing a home. Here, we will explore some of the most frequently asked questions from Redwing Living customers. We’ll take a look at the differences between freehold and leasehold, along with some of the pros and cons of each.
What is a freehold?
You may come across the term ‘outright sale’ when discussing freehold properties. That’s because owning a property's freehold means you own it outright - both the building and the land it sits on belong to you. You are registered in the Land Registry as the freeholder, and you own the title. For example, our Bluebrook and Aughton Wood Park developments are examples of freehold developments.
The key features of freehold:
- No annual ground rent to pay.
- Full responsibility for buildings maintenance and land that the property sits on.
- Freehold is still the most common way of selling standalone properties and includes the land they sit on.
What is a leasehold?
Leasehold is most common with apartment blocks, but is also a key feature of shared ownership.
Let's use apartment blocks as an example. The land and building is owned by the landlord, who is the freeholder. When purchasing a leasehold property, homebuyers buy a ‘lease’ from the freeholder. The lease can be of any length but usually they are between 90-125 years. Some can be as long as 999 years.
The key features of a leasehold:
- A leaseholder buys a lease for a property from the freeholder
- The freeholder is usually responsible for the upkeep of the common areas of the building, as well as the roof and exterior walls.
- In addition to the initial purchase price of the leasehold property, the leaseholder will also pay an annual ground rent, annual service charge and maintenance fees. (Also a payment of rent if you are a shared owner)