So, you have decided to take the plunge and purchase your first home. It can be confusing for first-time buyers, so where do you start? Once the initial budgeting stages are complete it is time to start the exciting business of house-hunting itself! There are many factors you should be aware of when searching for property. Aside from the usual questions, you should ask the agent to confirm whether the property is leasehold or freehold. In the UK, properties are generally divided into one of these two categories, so let’s start with a basic explanation of each.
Freehold – Own both property & land
Freehold simply means you will have complete ownership of both the land and property until you choose to sell. Conversely, leasehold properties do not include the sale of the land on which the property is built – instead you pay ground rent to the owner of the land (the freeholder). The majority of flats in England in Wales are owned with leasehold title, however this tenure can extend to other types of property (terraced houses in London, for example). Interestingly, the majority of properties in Scotland are freehold only.
Leasehold – Occupy property for length of time remaining on the lease
Essentially, leasehold explains that you have the right to occupy the property for the length of time remaining on the lease. In addition to any ground rent payable, a service charge is also usually applicable. However, charges including buildings insurance and sometimes gas and other utility bills can be shared amongst the residents, meaning you could save money in the long-term. You should also always check the number of years remaining on the lease before committing to a purchase; it’s also a good idea to investigate the cost of extending the lease.
Share of the Freehold - Freehold title has been transferred to the owners of the flats in a building
To complicate matters further, there are flats and apartments advertised for sale with a ‘share of the freehold’. This applies to properties where the freehold title has been transferred to the owners of the flats in a building. If there are more than four flats together, the freehold title will have to be registered in the name of a company of which the flat owners are members or shareholders. Owning a share in the freehold does not mean that each flat-owner becomes solely responsible for their part of their building; it will usually be necessary to agree arrangements for the management of a building between all the owners.
So, which do I go for? Freehold or Leasehold?
Don’t be put off just because a property is leasehold. Leasehold property is often cheaper and so you will get more for your money. Your solicitor will advise you on the technicalities and you now have a legal right to extend your lease after 2 years of ownership www.increaseyourlease.co.uk
Contact move4us - The Online Estate Agent on 01844 265410 www.move4us.co.uk
Blog post by Chloe Timberlake, Service Manager | UK Online Estate Agent | Selling Properties Online
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