Freehold and leasehold are the most common forms of property ownership in the UK. I often feel that the difference between them can be skimmed over by estate agents as they assume that everyone knows the complexities of the ownership market, but the reality is quite different. Very few people understand the legal complexities and the costs and restrictions that can be imposed on you, particularly with regard to leasehold properties. The decision as to whether you are buying a freehold or leasehold home really shouldn’t be taken lightly at all.
So what is the difference? Freehold is the simplest and most straightforward form of home ownership. With freehold you are regarded as the ‘freeholder’ and you in effect own the building or the land outright with no other owner or landlord involved in the ownership of the property at all. The house is yours forever (in perpetuity) and the land registry will state that you own the ‘title absolute’. You are free to do whatever you’d like to do with the property under the usual planning laws and building regulations that apply to everyone. It is more common for whole houses to be sold as freehold properties, unless it is part of a large historic estate where the estate prefers to remain as freeholder. For example, the Duke of Westminster’s ‘Grosvenor Estate’ owns a substantial amount of land and buildings in Mayfair and Belgravia. The estate retains as much ownership of the properties as possible (they are the freeholder) but they grant leases on entire homes, apartments, retail and commercial property to generate huge amounts of income. The 500 acres of land his ancestors inherited north of the Thames in 1677 and then developed have made the current Duke the 9th richest person in England! Remaining a freeholder for many years certainly pays.
Photo Lizzie Orme