With prices for homes soaring and showing no signs of slowing, selecting the right kind of property is vital. We will look at the differences between these two, and the key legal distinctions
In essence the definition of freehold is that you purchase the property and the land it sits on, while leasehold implies that you have the property or building however you must pay ground rent and other costs on the land that it sits on.
Is freehold the better choice?
It definitely gives security as having the freehold guarantees the full ownership. However, it could be more expensive to buy at first.
The freehold property is also simpler to sell because the earlier the lease’s expiration date, the more difficult it is to sell. Mortgage rates can also rise for leases that are less than 70 years old.
It is possible to extend the lease for an apartment however, at the cost. Based on the length of time remaining of the lease, an extension can cost as much as tens of thousands of dollars. To lessen this burden government has provided a number of proposals to make it more simple and more affordable for leaseholders extend their leases, purchase freeholds, and get rid of ground rent.
What is the cost of leasehold cost?
While leasehold homes are generally more affordable than freehold properties, there are expenses involved which include an annual fee for ground rental, upkeep costs and other services offered in shared buildings, as well as building insurance.
Are there any benefits to leasing?
There is a consensus that owning a freehold property is simpler and comes with less restrictions, however there are advantages for leasehold properties, especially in shared buildings. It could be that you have access to facilities shared by the community such as gyms, a residents lounge, or covered parking.
Examining the leasehold versus freehold
Information about this can be found on this Land Registry website, where the address is searchable and information can be found on the title to the property, which identifies the property’s leasehold, freehold or. It costs £3 for each copy of an official title record or the title plan.
This document could also contain:
Who is the owner of the property
Specifics of any restrictive covenants’ – agreements to not to do certain things with the land, for example, not building on a specific region
The details of any ‘easements’, which are the rights of one land parcel over another, such as the right of way
In some instances the title register may not provide the details of restrictive covenants and easements, but will indicate what documents contain them.
It is possible to get some information from the information on land and property service, without purchasing an official title record or the title plan.
For assistance and guidance regarding leasehold and residential properties get in touch with Leasehold Services by contacting their support team.
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