What is Leasehold?
Understanding whether the property you are looking to buy is Freehold or Leasehold is critical as it will affect your ownership of the property.
In the UK, Leasehold properties are typically flats or apartments however, it isn’t uncommon to come across leasehold houses – especially in areas such as the North East.
So what are the main differences?
If you buy a freehold property you own the property outright until you choose to sell or otherwise dispose of the property.
If you buy a leasehold property you own the right to occupy the property for a fixed period of time by virtue of a legal document called a Lease.
What is a Lease?
The lease sets out how much of the property you own the right to occupy and for how long. It will also set out what rights are granted for your use of the property, e.g. rights of access, and what restrictions you are obliged to comply with, for example you may not be allowed to structurally alter the property without the landlord’s consent. The lease also confirms what your landlord is obliged to do e.g. insure the building and allow the tenant “quiet enjoyment” of the property.
If you are buying a leasehold property your conveyancer should advise you on the terms of the lease, as lease terms are specific to each property.
Are there any other considerations?
Usually you will be required to pay an annual ground rent to the landlord and, where your leasehold property is a flat, it is common that you will be asked to pay service charges for shared services e.g. cleaning of communal areas, gardening, lift servicing and maintenance etc. It is important that you consider these potential charges when budgeting.
Will it take longer to buy?
Leasehold transactions are generally more complex than freehold properties, by their very nature, and can take longer as a result for the conveyancing work to be completed. That said, every property is unique and the time taken to complete the purchase will also depend on other factors.
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