When buying a home or any other property, you might come across the terms "freehold" and "leasehold." These terms are important because they explain how much control you have over the property. Let's break down the difference between freehold and leasehold property in simple language.
What is Freehold Property?
A freehold property is one where you own the building and the land it is built on. You have full control over the property, and you can make changes, sell it, or pass it on to your children whenever you like.
- Ownership: You own the property and the land completely.
- Time Limit: There is no time limit on how long you can own the property.
- Maintenance: You are responsible for maintaining the property and the land.
- Selling: You can sell it whenever you want without needing permission from anyone else.
In short, when you buy a freehold property, it’s yours to keep forever.
What is Leasehold Property?
A leasehold property is different. Here, you own the building but not the land it is built on. The land is owned by someone else, usually called the "freeholder," and you only have the right to live in the property for a certain number of years, depending on the lease.
- Ownership: You own the building but not the land. The land belongs to the freeholder.
- Time Limit: You only own the property for a set amount of time, like 99 years or 125 years. After that, the property returns to the freeholder unless you extend the lease.
- Maintenance: You may have to pay ground rent and other charges to the freeholder for maintaining the land.
- Selling: You can sell the leasehold, but the buyer will have to follow the lease’s rules and restrictions. Also, the value of a leasehold property may go down as the lease gets shorter.
In summary, with a leasehold, you don’t own the land, and your right to live in the property is limited by time.
Key Differences Between Freehold and Leasehold Property
| Freehold | Leasehold |
|---|---|
| You own both the building and the land. | You own the building but not the land. |
| Ownership is forever. | Ownership is for a set number of years. |
| No ground rent to pay. | You may have to pay ground rent and service charges. |
| Full control over the property. | Limited control, with certain rules to follow. |
| Easier to sell as it does not have a time limit. | Can be harder to sell as the lease gets shorter. |
Which One is Better?
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Freehold properties are often better if you want full control and long-term ownership. They tend to be more expensive but are more straightforward to own and sell.
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Leasehold properties can be cheaper to buy upfront but come with ongoing costs like ground rent. They can be good if you're okay with limited control and ownership for a specific number of years.
Conclusion
When choosing between freehold and leasehold, think about your long-term plans. If you want to own your home without any time restrictions or extra costs, a freehold property is probably the best choice. However, if you're looking for something more affordable and don't mind paying rent or fees, a leasehold property might work for you.
Understanding these differences can help you make a better decision when buying a property!
Read more: https://www.aavas.in/blog/difference-between-freehold-and-leasehold-property
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