Sep 14, 2021
When you’re looking to buy a property in England or Wales, you’ll notice that there are different tenures (the way in which you hold a property): leasehold and freehold. We’re here to explore leasehold vs freehold and explain how it impacts you as a property owner.
When you buy a freehold property, it means that you own the building and the land it sits on outright. As a freeholder, you’re responsible for maintaining the property and the land you own.
The land that the property sits on (and the surrounding building if it’s a flat) is owned by a separate freeholder, the landlord. When you purchase a leasehold, you’re only buying the right to live in the property for the length of the lease.
Leaseholds can last a number of years, with standard lengths around 90 to 120 years. However, some leaseholds can last for as long as 999 years.
The length of the lease on the property that you’re interested in does matter. It might be harder to get a mortgage if you’re buying a leasehold property with less than 70 years left on the lease. Lenders prefer a leasehold with at least 30 years left after the final mortgage payment to ensure the property will retain its value over time.
For buyers interested in leasehold homes, be aware that there may be extra charges associated with these properties. As you don’t own the land, you’re not responsible for maintaining it. Instead, you’ll be required to pay a fee to cover this, known as a service charge, which goes towards the upkeep of shared areas such as the gardens, entrance halls and staircases.
Leaseholders may also have to pay ground rent, building insurance and maintenance fees. However, the government is working to put an end to ground rents for new, qualifying, long residential leasehold properties in England and Wales.
If the property listing doesn’t state the tenure, you can check the Land Registry website. Search by postcode and look at a copy of the building owner’s title, which will confirm whether it’s freehold or leasehold. You don’t have to own the property to use this service.
The question of leasehold vs freehold isn’t a straightforward one, but certainly one to consider when buying a home. Buying a freehold property tends to be simpler and more flexible than a leasehold, but most flats are leasehold properties.
Freeholders have the freedom to make changes as to how their property looks. On the downside, compared to a leasehold property, there’s more responsibility placed on the owner to maintain their dwelling and land and bear the costs of doing so, which can be high and unexpected.
The benefits of a leasehold property, which tend to be flats, are that they have communal facilities to enjoy, such as a gym, concierge and covered parking.
Overall, when it comes to leasehold vs freehold, owning a freehold property is a little simpler and less restrictive than a leasehold. That said, although leasehold properties don’t allow complete ownership, they’re normally more financially within reach for the first-time buyer.
Because buying a leasehold property means renting from a landlord, there are a few more considerations to take into account.
As with every big home buying decision, the choice is in your hands once you know the basics on leasehold vs freehold. Whether you choose a freehold or leasehold property, you can find your next home for sale on Boomin. As an always-on property platform, you can browse homes and book viewings online, 24/7. With a wider buying experience, search the vast range of properties for sale today.