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leasehold or freehold question

hi
as you can see
<< im not in the uk

im looking at properties in greater London area and i have a question ;
a lot of them say,leasehold or freehold,,, can someone explain the difference as it does not seem to effect the price..
thanks
WAS DEBT FREE & STILL BAAARRRRRKING :cool:
hello my name is shaun,,,and im not so addicted to farmville,still addicted to football:o:o

BAAAARRRRRRRRRRKING er insanely so :o

Comments

  • OK - this is the basic gist.

    Freehold - when you buy the land. There may or may not be a property on the land. You own indefinitely and can build/modernise/repair if/when you like as long as you follow any legislation or any weird covenants.

    Once you have bought the property you need pay nothing else... except any mortgage/secured loans. However, if the property is on an estate and has services provided and/or has contiguous elements (like a roof) where responsibility for works has not been passed to you, you will be obliged to pay. The transfer documents will show any such covenants.

    A share of the freehold means that a seperate party has the the same entitlement as above - perhaps in a different proportion. Leases may have been granted to specific areas within the freehold property.

    Leasehold - when you buy what is essentially a tenancy over a long period of time e.g. 99, 125 or 999 years. You do not own either the property or the land.

    The lease will define the part of the freehold property that is 'yours' i.e. that has been demised to you exclusively - imagine it as buying rights to everything from the plaster on the walls inwards. It will also define any parts over which you have easement rights - like communal gardens or hallways.

    There are restrictions on what you may do in terms of repairs etc within the property and you will have service charges and ground rent to pay to the freeholder. You will be required to contribute to a proportion of the costs of repairing, maintaining and sometimes improving the sucture - walls, foundations, roof, windows etc so additional costs can be high.

    Hope that helps.
    Opinion, advice and information are different things. Don't be surprised if you receive all 3 in response. :D
  • By the way my place is leasehold and never ever again even though I own a share of the freehold. The issues arising with our management company drive me nuts and I am one of only four flats.
  • thanks for the replys

    but my next question is
    why lease when for similar money you can buy,,,,or is this just the way thing are done in London??,,,
    so ,,,,with flats and apartments,,where you are only buying part of say an old Georgian house divided into 3 flats you would be buying your flat,,,,,but have joint responsibility for ,,,,grounds,boundary walls and roof,,,,and have to pay a rental as well ,to the lease holder,,,,,obviously the conditions of the lease would change with each property

    s x
    WAS DEBT FREE & STILL BAAARRRRRKING :cool:
    hello my name is shaun,,,and im not so addicted to farmville,still addicted to football:o:o

    BAAAARRRRRRRRRRKING er insanely so :o
  • cattie
    cattie Posts: 8,841 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    To simplify things, flats are leasehold, houses for the most part are freehold, though there are some leasehold houses.

    Even if flat owners have got together & bought the freehold of their building, thus then each owning a share of freehold, each flat will still have a lease.

    I've owned leasehold property in London & have to say I never had any problems & wouldn't hesitate to buy another leasehold flat/maisonette in the future. Of course it's down to your solicitor to check out that the building is being effectively managed & everything is as it should be.
    The bigger the bargain, the better I feel.

    I should mention that there's only one of me, don't confuse me with others of the same name.
  • pie81
    pie81 Posts: 530 Forumite
    Basically think of leasehold as a really really long rental agreement (eg for 100 years).

    As cattie says, pretty much all flats will be leasehold, pretty much all houses will be freehold (except some in central london and on estates).

    So the reason people buy leasehold is usually because they want/can only afford a flat rather than a house.

    the main practical differences are:

    1) With leasehold, the lease contains certain rules about what you can and can't do. For example you will not be able to make structural alterations without landlord permission, you may have to have carpets down to prevent noise, etc.

    Freehold has no rules except those the law lays down.

    2) With leasehold, the landlord has the responsibility to maintain the shared parts of the building (roof, stairs, external decoration, etc). They will do this work and charge the cost to the leaseholders. So you as the leaseholder don't have the hassle of getting the work done yourself. BUT on the other hand you don't have control over whether work is done, or how much it costs...you can get saddled with a big bill for work you might not have chosen.

    with freehold it is up to you whether you do any maintenance or not.

    3) Similarly with leasehold, the landlord will arrange communal expenses such as buildings insurance and electricity for the hallways etc. BUT again the cost of this is charged back to the leaseholders.

    with freehold you bear all these expenses.

    4) With leasehold you don't own the place forever. You have a lease for a certain number of years which obviously decreases as you own it. Anything less than 80 years left and the property may be difficult to sell onwards/get a mortgage for.

    Whereas with freehold you own the place forever.
  • thanks pie

    its the selling on bit that sounds like it could get dodgy!!!

    and i also presume that the lease for the whole house can be sold with say 4 flats,,,4 sitting tenants,with out consulting the 4 flat owners??
    WAS DEBT FREE & STILL BAAARRRRRKING :cool:
    hello my name is shaun,,,and im not so addicted to farmville,still addicted to football:o:o

    BAAAARRRRRRRRRRKING er insanely so :o
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