Does it really make a difference if you buy freehold or leasehold? If you’re new to buying property, these terms will have come up but you might not necessarily know what they mean. However, the differences between the two are significant and could determine whether or not you make a purchase.
As a general rule, houses are more likely to be freehold and flats are leasehold. But this is not always the case. When you buy a freehold property you will own the building and the land on which it sits. For a leasehold, you own the building for a set number of years according to the lease. The freehold will be owned by a landlord who is responsible for maintaining the property (usually a block of flats) as well as the land on which it sits.
Leasehold properties need to pay ground rent to the landlord or freeholder. In recent times these have been escalating and they represent a cost that needs to be factored into the purchase price and any future outgoings for the duration of the lease. But major repair works should be carried out by the freeholder. However, there can be cases where you will still be expected to pay. The landlord may also decide to carry out work at a time that is not convenient for you.
As a leaseholder, you will also need to seek permission to carry out renovations or work to the property. Plans will need to be approved by the landlord before you can start the work. And there is no guarantee that they will give their consent.
You also need to bear in mind the lease length. Below around 70 years you may find it difficult to get a mortgage. And to renew a short or expiring lease can cost a lot of money. But as the leaseholder you do have a legal right to renew the lease.
Finally, when you come to sell the property, there may be some additional costs such as the Deed of Covenant.
In general, leasehold properties are cheaper as they come with more restrictions and additional costs. If you’d like to know more about leasehold and freehold properties, then get in touch with our team here at Agile. We can offer advice on which might be most suitable for your needs, and can further explain the advantages and disadvantages of each form of purchase. Give us a ring on Norwich 01603 567804 or send us a message.
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