What is Leasehold and Freehold property?

When you first start searching for property, terms such as ‘freehold’ and ‘leasehold’ can seem confusing. Before buying your perfect home, it’s important not only to be aware of your rights and responsibilities, but to understand the costs involved.

What does ‘Leasehold’ mean?
A property offered as ‘leasehold’ is owned by a ‘freeholder’. Buying a leasehold property gives you permission to live in the property for as long as agreed under the terms of the lease. Leases often run for 90 or 120 years, or even longer - but the leaseholder is free to sell their home at any time. With each new owner, the lease gets progressively shorter, until it expires or is renewed.

When you purchase a leasehold property you will sign a contract with the freeholder, which sets out the legal rights and responsibilities of each side. Normally the freeholder will be responsible for the ‘common parts’ of the building, such as the hallway and staircase, as well as exterior parts, including the walls, window frames, roof, front and back doors. As a leaseholder, you will be responsible for the interior parts, keeping them well maintained and in good decorative order, but you will not be allowed to make structural changes without permission from the freeholder.

You will also be expected to pay annual charges such as service charges (if you live in an apartment), maintenance fees and a share of the buildings insurance, as well as an annual ‘ground rent’.

What does ‘Freehold’ mean?
If your property is ‘freehold’ it means that you own it outright, for an unlimited period of time. Your name goes on the title deeds, held by the Land Registry, as owner of the ‘title absolute’. This means you won’t have to pay any of the charges associated with a leasehold property, but you will need to carry out and pay for all maintenance and repairs yourself. You will usually be free to make structural changes to your property, subject to planning permission.

Things become slightly more complex, however, if you want to buy a freehold flat in a building where a number of other freeholders also own flats. This requires signing a legal agreement with the others to jointly maintain the exterior and common parts. You can either employ a property management company to carry out the work or share the responsibility between you.

Whether you are buying leasehold or freehold, Daniel Cobb will be happy to advise you on your property purchase. We have a fantastic portfolio of properties in sought-after Central London areas, so call our London estate agents right away or start your search for property on our website. For more tips on buying property read Buying your first home in London; here's a sales pitch without the patter and Buying a suitable family home in London.