Understanding the intricacies of property ownership can feel like an overwhelming task. Two of the most important distinctions to understand are leasehold and freehold, with both terms commonly used in the property market but prone to being misunderstood. It is important to avoid such pitfalls, as these terms can have a major impact on the homeownership process.
Property management
A freeholder is fully responsible for their property, from maintenance and repairs to any alterations that need to be made. This gives them complete control, as they won’t require permission from others to make any updates or upgrades to their home; however, they may have to ask for permission if the updates or upgrades may affect the surrounding area.
In contrast, a leaseholder will need to gain permission from either the management company or the freeholder before making changes to the property or subletting it. In addition, the lease may have restrictions that limit what can be done with the property.
Although buying a leasehold property can be a daunting task for some, companies such as https://www.samconveyancing.co.uk/news/conveyancing/5-top-tips-for-fast-conveyancing-132 can help with fast conveyancing.
Ownership
Freehold property owners won’t have to concern themselves with the complications and potential difficulties that come with lease expiries and possible extensions, as freehold properties are owned indefinitely.
A leaseholder will only own the property for a fixed term. While lease lengths have a lot of variation, it is important to pay close attention to the remaining term. It is common for properties with shorter lease terms – usually 80 years or less- to have less value, making them more difficult to sell or mortgage.
An article in the Guardian can help you understand more about a leasehold.
Charges and fees
In contrast to leasehold properties, freeholders won’t be required to pay for service charges, ground rent, or any of the other costs that often go hand in hand with maintenance and management fees.
Leaseholders are usually required to pay ground rent or service fees. Ground rent prices can vary, and it is crucial to closely review the terms as they can increase over time. Service fees cover the costs of maintenance and management in common areas, such as gardens and hallways. They also cover the building’s insurance.
Overall, the choice between leasehold and freehold is an important one that will need a lot of thought and consideration. It is a decision that should line up with your future plans, preferred lifestyle, and – most importantly – financial status. By knowing and understanding the core differences and intricacies of these two types of property ownership, buyers can make a clear, informed decision that is most suitable for their needs and circumstances.