When looking to buy a property, you will hear many unfamiliar expressions, words used by professionals or friends that you may not fully understand. Two phrases you will hear over and over again when searching for a property to buy are ‘freehold property’ and ‘leasehold property’. It is essential to know the difference between the two types of property. This article will focus on freehold properties, defining what the term means and what the advantages and disadvantages of owning a ‘freeholder property’ are.
What is a “freehold property”?
When you purchase a freehold property, you will receive outright ownership of the property and the land on which it stands. There are no time limits as to how long you own the property, it is yours until you choose to sell it to someone else. You have complete ownership of the land and the property, for an indefinite period.
What rights and responsibilities does a freeholder have?
Being a “freeholder” removes most of the confusion typically associated with leasehold properties. There is little question as to who owns what part of the property or who is responsible for repairs. As a freeholder, you are the sole owner and you are responsible for the repairs.
The owner of the freehold has the right to maintain and alter the property as they wish. Any alterations to the freehold property must be in accordance with the law and the planning restrictions of the local council, but other than that, the owner can choose to do as they wish.
With the responsibility of becoming a freehold owner, there also comes great benefits, so it is important to consider both the advantages and disadvantages to make sure it is the best option for you.
- You are the sole owner.
- You can do with the property as you wish within the confines of the law and local authority.
- You will not have to pay any ground rent.
- It is a long-term investment.
- You do not have the concern of a lease running out. The property is yours indefinitely.
- You are responsible for the functioning and maintenance of the building and land.
- You have a responsibility to your local council and community to be a responsible homeowner. If the building falls into disrepair, you are too noisy, or your rubbish is a nuisance to the neighbours you are legally and financially obligated to take action.
- Buying a freehold property can in some cases be more expensive than buying a leasehold property.
Buying a share of the freehold
In the case of an apartment, you cannot buy the freehold for your specific apartment, but you can buy a share of the freehold for the whole apartment building. Homeowners who own an apartment on a leasehold basis, can be granted the option to buy a share of the freehold by buying into the organisation that owns the freehold.
Apartment owners, who buy a share of the freehold, will become members of the freehold organisation that owns the building. The apartments are still owned on a leasehold basis, but as members of the freehold organisation, you can easily renew your lease or be granted a new long-term lease, with minimum ground rent and have a say in how the whole building is managed.
A distinct advantage of owing a share of the freehold, is that it removes the concern over expiring leases or having a lease that is too short to allow you to get a mortgage or resell the property. It also allows for greater control over the buildings repairs and renovations.
Once you have a share of the freehold of your apartment building, you become partly responsible for the maintenance of the building’s communal areas, this includes the outdoor areas, entrances and hallways. You must ensure they are looked after.
This increased responsibility is often viewed as a disadvantage due to the fact that it requires you to be partly responsible for management and maintenance of the building, communal areas. You will also be partly responsible for the collection of service fees from all the apartment leasehold owners to cover the costs of repairs and the continual maintenance of the building.
Always do your research before buying a property.
As time progresses and the methods in which you can own a property become more diverse, it becomes easier for you to invest in the property market, but also more difficult to know exactly what you are buying. There are distinct advantages and disadvantages to owning a freehold property so before making a commitment, make sure to do your research and never hesitate to seek legal advice from our Solicitors online right now.