What’s the difference? Basically, it’s the difference between owning your own home outright, and having a landlord. With a freehold property, you own the property outright, including the land it stands on, in perpetuity. It is in your name in the Land Registry as ‘freeholder’ who owns the ‘title absolute’.

With a leasehold property, you lease it from the freeholder – effectively a landlord – for a number of years. And while leases are usually long term and can be as high as 999 years, they can be much shorter. When the lease comes to an end, ownership returns to the freeholder, unless you have the option to extend the lease.

In short, the difference between a freehold property and a leasehold property is an important one, and is why you should be sure of the precise tenure of a property before you make the decision to buy, or you could regret it later.

If a property is freehold:

If you own the freehold, you won’t have to pay annual ground rent. You won’t have to worry about the lease running out, the freeholder failing to maintain the building, or additional charges.

If a property is leasehold:

As a leaseholder you have a contract of legal rights and responsibilities with the freeholder, who will normally be responsible for maintaining the common parts of the building like the entrance hall and staircase, outside walls and roof.

What’s more, as a leaseholder you’ll pay maintenance fees, service charges, your share of the buildings insurance, and annual ground rent. You’ll also need permission from the freeholder for any work done on the property.

How long is left on the lease?

If you’re thinking of buying a property leasehold, make sure you consider how much time remains on the lease as this will affect the value of the property. A short lease could make it more difficult to sell. A short lease could also affect your chances of getting a mortgage, so make sure the lease has enough term remaining or you might have problems.

Can you extend the lease?

If buying a leasehold property, you can ask the freeholder to extend the lease at any time. Once you’ve owned your home for two years you have the right to extend your lease by 50 years as long as you are a qualifying tenant. You’ll usually be a qualifying tenant if your original lease was for more than 21 years. You’ll have to pay the freeholder for extending the lease, with the cost depending on the property.

Buying the freehold on a leasehold property.

You may have the right to buy your house or flat outright, in which case you’ll then own the freehold. This is called ‘enfranchisement’ but it does involve complicated legal procedures and their costs, and is one reason why many people prefer to simply extend their current lease with the freeholder.

Buying a home is sometimes not as straightforward as it appears. At Louis Taylor, we have over 145 years of experience in all things property meaning you can be confident that your house move is being handled by experts. If you’re looking to sell your home, get in touch on residential@louis-taylor.co.uk or call us on 01782 622 677.