Freehold Property

Freeholds are where the land on which the property is built is part of the sale and no ground rent or service charge is payable. You own the property outright. Subject to the law and planning restrictions, you can largely do what you like on your land.

Freehold properties for sale tend to be houses, though there are an increasing number of freehold flats available. This is because of legislation that is making it easier for leaseholders to buy the freehold title. Jointly owned freeholds are also becoming quite common in relation to flats and maisonettes.

Leasehold Property

Leaseholds are where the land on which the property is built is not part of the sale. Essentially, you are buying the right to occupy a portion of a building for a given length of time. You will have to pay ground rent to the owner of the land (called the freeholder) and service charges for the upkeep of the Estate, in addition to a one-off payment that buys you ownership of the lease until you either sell the property, or the lease expires.

Leasehold purchases generally occur in buildings that comprise more than one unit, such as blocks of flats, or commercial property. In London, many houses are also subject to leasehold title. The amount of alterations you can make to the property varies in accordance with the lease and you may well have other conditions imposed upon you by the landlord.

The length of a lease can vary and you should check that the length of the lease on the property you are interested in buying is acceptable to the mortgage lender. An outstanding Lease length of 80 years or more is generally acceptable in the broader mortgage market and under the 1993 Leasehold Reform Act (as amended) legislation now exists giving leaseholders the right to acquire a 90 year extension to their existing leases subject to meeting certain criteria.