Freehold or leasehold?
Every individual’s circumstances are different and when deciding whether it is best to purchase a freehold or leasehold property only you as the buyer can decide what is best for you.
Do you like your own space, not have to answer to anyone (within reason) or simply own a pet? Then a Freehold property may be more to your liking. If none of these are of concern to you then a Leasehold Property may be an option. When choosing a freehold or leasehold property, it is worth considering the following;
Freehold; you will own both the property and the land allowing you complete control over the property until such time you choose to sell. You are able to change the windows, replace doors, modify the property (subject to statutory requirements/covenants in the title) and apply for extensions, internal alterations etc.. You will not have to worry about service charges or ground rent for the property itself and can therefore budget more easily and have control over what you spend money on in respect of the upkeep of the property.
Leasehold; you will only own the property and not the land it sits on. Flats tend to be leasehold. The freeholder (Landlord) will own the actual building and will grant leases of the individual flats. It is a time-sensitive entity that you will only own for a certain amount of time and will depreciate in value once the term of the lease reduces to 80 years. You will not own communal areas such as the stairs/gardens as these are owned by the Freeholder.
You of course get to pay for this privilege by way of a service charge and ground rent. The cost of service charges and ground rent is governed by the lease and by what expenditure is required year on year for the maintenance and upkeep of the block. If any major works are required then these can prove very costly. Often the Landlord will employ a management company to manage the collection of service charges and ground rent. The management company will arrange for works to be carried out as and when required but their administration costs can be high and this is often another contentious point for leaseholders.
There may be covenants in the lease whereby you may need the Landlords consent to have a pet, rent out the property or carry out internal alterations and consent may not always be given thereby restricting your enjoyment of the property. Both freehold and leasehold property have their positives and negatives. A freehold property has fewer restrictions and allows more freedom. A leasehold property has more restrictions, however, you will not be responsible for the maintenance of the structure of the building or the building’s insurance.
Leasehold flats also tend to be cheaper to purchase than a freehold house which means that they are more appealing to first-time buyers trying to get on the property ladder.
If you require more advice on the best option for you and whether to choose a freehold or leasehold …Talk to Tollers conveyancing team on 01602 258558 and they will be happy to guide you through.