Properties sold in the UK may be freehold or leasehold.
Here is what both of those mean and my thoughts on buying a leasehold property...
When you buy a property freehold, you own the building and the land it’s on until you decide to sell it. If you buy a property freehold, it means you completely own the property and the land it sits on and are responsible for all costs relating to the property. Its is also called ‘fee simple’.
But if you buy a property leasehold, you own only the building (not the land it’s on) and only for a set number of years. When the term of the lease expires, the property will belong to the landowner unless you can extend the lease. The closer you are to the lease expiry date, the less valuable the lease becomes,
Newly-created leases can be anything from 99 or 125 years to 999 years. If a lease has less than 80 years left to run, it may make the property hard to sell, and it may even be difficult to remortgage.
With leasehold you do not own the land the property is on, and if it’s a flat you don’t own communal areas such as stairs or hall, nor the structure of the building itself.
Normally, leaseholders pay fees to the freeholder. But government legislation coming into force on the means that ground rent charges will be banned on most new residential leases and retirement properties, which will put an end to annual ground rent increases.
A lease will also tend to include certain restrictions; for example, you may not be allowed pets, and you may need to ask permission to make changes to the property. If you break any conditions you could be taken to court and may risk losing your lease.
The freeholder is usually responsible for buildings insurance (though not contents insurance). And the freeholder should consult with you on certain maintenance costs and some charges you can challenge if you disagree with them.
As a leaseholder, you also have the right to demand the freeholder’s management of the lease be transferred to a ‘right to manage’ company set up by you and other leaseholders. Contact me if you wish to learn how to Title Split to substantially increase your profits on your next investment. dennis@mauinvestments.co.uk
Here is what both of those mean and my thoughts on buying a leasehold property...
When you buy a property freehold, you own the building and the land it’s on until you decide to sell it. If you buy a property freehold, it means you completely own the property and the land it sits on and are responsible for all costs relating to the property. Its is also called ‘fee simple’.
But if you buy a property leasehold, you own only the building (not the land it’s on) and only for a set number of years. When the term of the lease expires, the property will belong to the landowner unless you can extend the lease. The closer you are to the lease expiry date, the less valuable the lease becomes,
Newly-created leases can be anything from 99 or 125 years to 999 years. If a lease has less than 80 years left to run, it may make the property hard to sell, and it may even be difficult to remortgage.
With leasehold you do not own the land the property is on, and if it’s a flat you don’t own communal areas such as stairs or hall, nor the structure of the building itself.
Normally, leaseholders pay fees to the freeholder. But government legislation coming into force on the means that ground rent charges will be banned on most new residential leases and retirement properties, which will put an end to annual ground rent increases.
A lease will also tend to include certain restrictions; for example, you may not be allowed pets, and you may need to ask permission to make changes to the property. If you break any conditions you could be taken to court and may risk losing your lease.
The freeholder is usually responsible for buildings insurance (though not contents insurance). And the freeholder should consult with you on certain maintenance costs and some charges you can challenge if you disagree with them.
As a leaseholder, you also have the right to demand the freeholder’s management of the lease be transferred to a ‘right to manage’ company set up by you and other leaseholders. Contact me if you wish to learn how to Title Split to substantially increase your profits on your next investment. dennis@mauinvestments.co.uk
Posted: Wed 20 Dec 2023