Freehold Vs Leasehold
Buying a freehold property, in a nutshell, means you are buying the property AND the land it stands on. You are the owner. There is no reason for a house to be sold as a leasehold buy. Being a freeholder means you are responsible for the entire property including the structure and exterior and all that is in your ‘freeholder’ perimeter.
Leasehold means that you own the property but NOT the land the property is built on. Essentially, the leaseholder rents the property from the freeholder for a number of years, decades or even centuries. You as the leaseholder own the property, generally a flat, and the freeholder, sometimes called the landlord, owns the building and is responsible for the communal areas, exterior walls and the roof.
What am I responsible for as the leaseholder?
- Maintenance fees, annual service charges and a share of building insurance
- Annual ground rent, payable to the freeholder
- Permission may be needed for any major works
- There may be restrictions on the leasehold e.g. no pets allowed
- Failure to meet any of the responsibilities may result in a forfeit of the leasehold
Can I buy the flats Freehold?
You can ask, or offer to purchase the freehold at any time, however, you cannot do this alone. You MUST get your neighbours on board as, by law, over half the leaseholders of the building must come together in order to purchase the freehold.
Are we eligible to buy the freeholder as a collective group?
If you meet the following requirements, then YES, you are eligible.
- The block must contain at least 2 flats
- At least half the leaseholders are going forward for the freehold
- No more than 25% must be used for commercial use
- Two thirds of the block must have long leases
How much does it cost to buy the leasehold?
In retrospect – the shorter your lease, the pricier that freehold. Bear in mind the costs that come with this –
- A surveyor for the freehold valuation
- Legal fees
- Stamp duty land tax (Applicable if purchase price exceeds £125,000)
What are the benefits of buying my leasehold and becoming a freeholder?
- Added value to your home
- NO ground rent
- You control service charges
- Free lease extensions – excluding legal fees