Leasehold vs Freehold

Leasehold

Leasehold means someone else owns the ground the building is built on. A minimum 85 years is usual as most banks won’t lend to you on a Mortgage with less than that. If you have less than 85 years on your lease, you will need to get it extended, which can be quite tricky, you need a specialist to help and it can get expensive.

When the lease ends, ownership returns to the freeholder, unless you can extend the lease. Most flats and maisonettes are owned leasehold, so while you own your property in the building, you have no stake in the building it is in. Some houses are sold as leaseholds. If this is the case, you own the property, but not the land it sits on.

Make sure you’re aware of the service charges before you put in an offer on a property as it might affect whether you can afford to live there. If you own a leasehold property, the repairs and maintenance on your property are your responsibility. But you’ll usually need to get the landlord’s permission to make any significant changes.

Freehold

This means you own the property in its entirety and it’s all yours including the land it’s built on. If you buy a freehold, you’re responsible for maintaining your property and land, so you’ll need to budget for these costs. Most houses are freehold but some might be leasehold – usually through shared-ownership schemes.

Property Valuation Reports (Red Book Valuations, Probate. Help to Buy, Capital Gains)

Getting a valuation for your property

If you own a freehold flat, a standard Valuation will apply.

If your property is leasehold you need to ensure there is a minimum of 85 years left or the Valuation will be reduced, to take in the fact there are less years, so best to get it extended first.

If you are buying a leasehold property, you need to make sure it has a minimum of 85 years, or you may not secure a Mortgage, please check with your bank first.

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