Have you ever wondered what the difference is between a leasehold and freehold property?
Your Local Estate Agents
Have you ever wondered what the difference is between a leasehold property and a freehold property? Have you wondered how it might affect you whether you're buying or renting? Below we explain what the difference is - just another bit of guidance from your Sheffield Estate Agents. It might seem obvious to some people but we're sure there's key bits of information in here not everyone knows.
When you buy a leasehold property, you're taking over the lease from a previous owner. You will own the property but will not own the land associated with the property. Meaning you will not be responsible for any maintenance or running costs of the building – but you may be charged a service fee or charge to cover any unexpected work that needs to be carried out. This will continue to be the case for however long the lease runs. This is something to take into consideration when buying a leasehold property. When buying a leasehold property with us at Belvoir Sheffield we can tell you when the lease runs out.
Sometimes, gaining a mortgage for this type of property can be a problem if the lease is for less than 70 years. Most mortgage lenders will need there to be at least 25-30 years left on the lease, after the end of your mortgage (meaning there will need to be 50-55 years on the lease when your mortgage starts). Consequently, selling the property on could also be difficult if there is less than 80 years left on the lease.
You are entitled to ask the landlord or freeholder to extend the lease at any time, and after you have owned the property for more than 2 years you can ask to extend the lease by 90 years, providing you are a qualifying tenant.
This information is correct for properties bought in England and Wales. However, properties in Northern Ireland and Scotland have different rules.
When buying a property with freehold, this means you own the property outright including all of the land associated with it. You will be responsible for the maintenance of the building and land, including any repairs during ownership. Meaning you will not be charged a service charge fee or anything like that. Your name will be listed in the land registry as freeholder.
Houses tend to be sold as freehold, with flats being sold as leasehold (with the owner or builder owning the freehold) however houses that are converted into flats are sometimes sold as ‘share of freehold’ (meaning the owner of the house shares the freehold with the others in the building.
For more information contact us on 0114 2525215.