What's the difference between freehold and leasehold?
Q: What do I need to know about freehold and leasehold property?
Pic: Freehold and leasehold property
At the end of the lease the property ownership reverts to the freeholder.
Suzanne Gray, Sales Area Director
Tenure of a property relates to Land Laws and Land ownership
Leasehold: Method of owning property (usually a flat) for a fixed term but not the land on which it stands. Possession of the property will be subject to the payment of an annual ground rent. When the lease expires, ownership of the property reverts back to the freeholder. Nearly all flats in London are leasehold.
Freehold: Outright ownership of the property and land on which it stands. A freehold estate in land (as opposed to a leasehold) is where the owner of the land has no time limit to his period of ownership.
- Lease lengths vary and most common are 99, 125 (in the case of ex local authority) 500 and 999.
- Mortgage lenders like there to be at least 50 years left at the end of a mortgage term (i.e. 75 years in total).
- The lease includes enforcement covenants, rights of way and access, repairing and maintaining covenants, details of ground rent.
- The lease length may be extended by agreement with the Freeholder at a specified cost.
- A service charge is usual but is not essential; some blocks have a separate managing agent employed by the Freeholder.
- Share of Freehold is when the Freeholder divides up his responsibility and the leaseholders become directors of their leasehold company.
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