What’s the Difference Between Leasehold and Freehold Properties?
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When buying a property there are a lot of options to factor in. When it comes to the difference between a leasehold and a freehold, both options have benefits and drawbacks. Our AWH Conveyancing Solicitors will help you pick up on any issues before purchasing your property and will inform you of all the information needed when purchasing either a freehold or a leasehold property.
The difference between a leasehold and a freehold property is whether you own the building and land your property is on.
What Does Leasehold Mean?
A leaseholder is someone who owns a property but not the land it is built on. Some examples can be flats or maisonettes where the leaseholder only owns the property but not the building and land around it. Ownership of this property is also for a set period depending on your lease. When the lease expires, ownership of the property returns to the freeholder.
Some Benefits of a Leasehold Property:
- General building repairs should be taken care of saving you the time and effort to upkeep the building
- You can report any issues to the freeholder who should take care of the issue for you.
- The properties insurance will normally be arranged by your freeholder.
What Does Freehold Mean?
A freeholder is someone who owns a property and the land it’s built on, for an unlimited period.
Some Benefits of a Freehold Property:
- You do not have to worry about your lease running out as you own the property outright.
- You can save money on ground rent, service charges and any other charges made by the freeholder.
- Flexibility regarding amendments and redesigns to the property.
How Many Years is Good for a Lease?
The general rule is that the longer the lease is the better it is. A lease of over 100 years can drastically raise your property marketing. On the other hand, a lease under 80 years is regarded as not good as it can make reselling or re-mortgaging a property difficult. Additionally, when buying a property with a lower lease period, lenders can be less likely to provide you with a mortgage.
Can I Extend My Lease?
To extend your lease, you first need to ask your freeholder, which can be done at any time. Once you have owned the home for two years, you can extend your lease by 90 years if you are qualifying tenant.
Am I a Qualifying Tenant?
You will pass as a qualifying tenant if your original lease was for more than 21 years. The process of extending you lease can be expensive depending on your property but it’s worth noting that the Government is working towards a Leasehold Reform to make extending your lease more affordable.
What if My Freeholder Won’t Agree on a Cost for Extending the lease?
In the case that you and the freeholder won’t agree on a cost for extending the lease, you can appeal to the Leasehold Tribunal. Our Conveyancing Solicitors can help you through the necessary steps of extending your lease.
Disputes Between Leaseholders and Freeholders – Conveyancing Solicitors
What Are My Rights as a Leaseholder?
As a leaseholder you have the right to prevent the freeholder (landlord) from taking financial advantage of you.
You are legally allowed to view:
- A list of what the services charges have been used for and how they’ve been calculated.
- Any receipts regarding work done to the building.
Additionally, you must be informed by your freeholder (landlord) if:
- Any building work has cost more than £250
- If any work carried out will last over a year
- Any work will cost more than £100 over the span of a year or more
What To Do if You’re Unhappy With Your Freeholder?
If you’re unhappy with the management of your building you live in a flat, you have two options:
- The Right to Manage:
The Right to Manage lets you as the leaseholder, take over some of the responsibilities of the freeholder. This can happen without having to prove bad management. To do this, you’ll need to qualify and set up a management company with other leaseholders. More information about solving a residential dispute can be found here.
- Apply to appoint a new manager:
To apply to appoint a new manager, you must prove bad management. Examples are unfair costs, building neglect or a breach of agreements. More information about solving a residential dispute can be found here.
How Can AWH’s Conveyancing Solicitors help?
Whether you are looking to buy or sell a property, AWH’s Conveyancing Solicitors will provide you with specialist guidance throughout the process. If you have any questions, we encourage you to get in contact below.
For a free, online quote regarding our Conveyancing Solicitors click here.
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