When purchasing a property, the first decision you will need to make is whether you are looking to purchase a freehold or a leasehold property. There are a number of factors that you will want to consider when making this decision, as they have differing impacts.
Key Takeaways
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Owning a freehold gives you full control of the property and land, without ongoing obligations to a landlord or third parties.
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Leasehold ownership means you have rights to a property for a set period, but the freeholder retains control over the building and land, often with additional costs.
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Howell Jones’ conveyancing solicitors in Surrey can guide you through freehold and leasehold matters, ensuring you understand your rights and obligations before purchasing.
What Does It Mean to Own a Freehold?
If you own a freehold property, you own the building and the land it sits on.
This is usually a house and is often the easiest form of ownership, as you own the property and land outright and do not need to deal with any third parties, such as a landlord. There are also generally no additional third-party costs involved, such as service charges. You are only responsible for maintaining the property and land to a suitable standard. There are some exceptions to this, albeit rare.
What Does It Mean to Own a Leasehold?
A leasehold property is typically a flat, and you do not own the building or the land that the building sits on. The lease gives you ownership of the internal shell in the specific part of the building that you will occupy.
The freeholder owns the building, including the foundations and roof. With a leasehold, there are often additional costs you must pay to the freeholder, such as service charges and ground rent (this varies from property to property, and your solicitor will be able to provide you with more information on this).
Share of Freehold
Despite common misconceptions, a share of freehold is still a leasehold, but you share the ownership of the freehold with the other co-owners. In this situation, you wear two hats as you share a freehold with the other co-owners and own a lease, so you are still a leaseholder as well. These are more common in maisonettes or blocks of flats where there is a limited company that owns the freehold.
The benefits of a share of freehold is the degree of control it grants you as the owner. You can actively participate in the management of the property. There are also fewer costs involved as the owners jointly decide the expenditures.
Which Option Is Better?
Deciding which type of property to proceed with will ultimately fall on your circumstances and preferences. Leaseholds are often cheaper, and depending on the location you are looking to purchase in, may be your only option. However, with a freehold, you have the guarantee in most circumstances that there will be no permanent costs or restrictions.
Before deciding whether to proceed with a freehold or leasehold, you must be aware of the effects of each. Your solicitor can advise you on these effects, your rights and obligations, and aid in understanding the terms of the lease where required.
At Howell Jones, we have a specialised team of conveyancing solicitors in Surrey who can guide and support you with leasehold and freehold matters. Contact our Surrey solicitors today to get professional guidance and advice.
