Freehold and leasehold are terms used when discussing property ownership, and they can be confusing for first-time buyers. Understanding these legal terms is essential, as they define your rights and obligations as a property owner. This article will provide a brief explanation of both types of properties to help clarify the differences.
When you purchase a freehold property, you become the exclusive owner of the property and the land on which it is built. You have full control over the property and can renovate or repair it as you please, within the confines of rules and regulations. The primary disadvantage of owning a freehold property is that you are solely responsible for any necessary repairs and maintenance. However, you are free to live in your freehold property for as long as you wish, and you can sell it at your discretion.
Key Takeaways
- When owning a freehold property, you are the exclusive owner of the property and the land it sits on.
- When owning a leasehold property, you do not own the property but have the rights to live and use the property for a set period of time.
- Freehold property owners are solely responsible for repairs and maintenance, while leasehold property owners may have to bear additional annual costs for these services.
In contrast, when you purchase a leasehold property, you are not buying the property itself but rather the rights to live in and use the property for a set period of time. Most leases are for 99 years, and it is possible to get an extension if desired. Leasehold properties often involve paying a ground rent to the freeholder, who is responsible for repairs and maintenance. This means that leasehold property owners may have to pay additional annual costs for these services. It is essential to read the lease documents carefully and budget for these potential expenses.
In summary, freehold ownership grants full rights to the property and the land on which it sits, while leasehold ownership provides the right to live in the property for a set period of time. Buyers of freehold properties assume sole responsibility for repairs and maintenance, whereas leasehold property owners may have to bear additional annual costs for these services. Finally, freehold properties are owned indefinitely, while leasehold properties are owned for a set period, typically 99 years.
