On the surface, the terms freehold and leasehold just seem like property jargon. But which category your property falls into actually has a huge impact on your rights and responsibilities as the owner.
Before you purchase a property, read our short guide on the difference between freehold and leasehold property ownership to make sure you know what to expect.
What is a freeholder?If you're the freeholder of a property, it means you own both the property itself and the land on which it's built. Unless your actions conflict with the law or the rights of your neighbours, you're free to treat the property and land as you choose. Most detached and semi-detached houses are freehold properties.
However, if you're the freeholder of a residential block, you have certain responsibilities to the leaseholders who occupy the property. In this case, it's highly recommended to seek local block management services to fulfil your legal duties.
Benefits of being a freeholderYou aren't subject to the terms of a landlord.
You don't need to worry about a lease running out and your property changing hands.
You don't need to pay ground rent or service charges.
What is a leaseholder?Where freeholders own both the property and the land it's on, leaseholders only own the property. Their ownership is also subject to a lease, though this can be up to 999 years in length. Once the lease runs out, full ownership returns to the freeholder.
However, the leaseholder can ask the freeholder to extend the lease at any time. The cost incurred will depend on the property, as will the conditions of the extension. This is a normal practice, and shouldn't necessarily dissuade you from purchasing a property.
What to consider when buying a leasehold propertyYou'll have a harder time getting a mortgage on a property with less than 80 years on the lease, and it'll be harder to sell.
You'll need permission from the freeholder to perform any major works.
You'll probably be subject to ground rent and service charges.
Benefits of being a leaseholderYou're not responsible for maintaining the land.
You can enter the property market at a lower price point.
You don't need to manage the maintenance or insurance if the property is in a block.
What's the role of a residential block management service?When it comes to block management, there can be tensions between freeholders and leaseholders, particularly over charges. That's why most residential block freeholders seek local property management services.
At Plymouth Block Management, we help freeholders determine and enforce appropriate ground rent and service charges. We also perform their duties to leaseholders and the property to the highest standards. This relieves the tensions between the two parties, and ensures satisfaction for freeholders, leaseholders and tenants.
To arrange expert residential or commercial property management services in Plymouth, contact Plymouth Block Management today.