There is so much jargon when buying a house, but don’t fear we are here to help! You may come across the term leasehold and freehold… But what are they and what is the difference between the two? Read below.
Freehold: What does it mean?
The term freehold, or to be the freeholder of a property means that you own it outright, including the land it’s built on. When buying a freehold, you’re responsible for maintaining your property and land, so may need to budget for these costs.
What are the benefits?
- You own the property outright, so you don’t have to worry about a lease.
- You won’t have to deal with a freeholder (known as the landlord).
- Don’t pay ground rent, services charges or any other landlord charges.
Leasehold: What does it mean?
Leasehold means you own your property subject to the terms of your leasehold, meaning you own the buildings but not the ground on which it sits.
When the lease does ends the ownership will then return to the freeholder, unless the lease has an extension.
Some flats are owned via leasehold, which would mean you own the property in the building but have no say over the building overall.
It is important to remember to be aware of any service charges when considering buying a leasehold property as it could affect if you can afford to live there. Charges to keep an eye out for:
- Ground rent.
- Administration charges, or
- Buildings insurance (arranged by the landlord).
If you would like to purchase the lease on your house this is possible but you can also extend your lease by 90 years, provided you are a qualifying tenant and have lived in the property for two years.
What are the benefits?
- Within some leaseholds it is the responsibility of the freeholder when repairing communal areas in and around the property or negotiating with neighbours to get it sorted.
- Terms in your lease mean if you're having any issues, for example with noisy neighbours, this can be dealt with by the landlord, rather than you taking the issue up directly with police.
- In some leases the buildings insurance will normally be sorted on behalf of the freeholder.
(Remember to check all of the small print in the terms of your lease for more details)
Other jargon you may see....
A commonhold acts as an alternative to long term-leaseholds. A commonhold allows owners of properties to form a “commonhold” association, which owns both land, building and common areas, this allows them to become responsible for the management, and upkeep of these areas. It is like a leasehold where you would be responsible for your own property. But, in contrast to leaseholds, there is no time limit for how long you own the property.
The important thing to do with all the jargon is simply get advice, we have some amazing property consultants that can help guide you and find the perfect property for your needs…
What jargon do you get confused about?
Pop us a message or comment and it could feature in our next jargon busting post!