UK homeowners have two main options: freehold and leasehold. With freehold, you own the property and land. With leasehold, you own the property for a fixed period of time but not the land it is built on.
Homeownership comes in two main forms in the UK: freehold and leasehold. Understanding the difference between the two is really important.
What is freehold?
Owning a property on a freehold basis means you own not just the building itself, but the land it stands on. You are responsible for looking after everything to do with the property, from your possessions inside to the walls and roof of the building’s outside structure.
As a result, if you want to make any changes to the structure of the property then you are free to do so, as long as you have any necessary planning permission from the local council.
What is a leasehold?
Leasehold is rather different. You effectively lease ownership of a property for a specific period. This tends to be over a lengthy period, but can vary from anywhere between 40 to 999 years.
You will have a contract with the freeholder of your property, which sets out precisely what you are responsible for. There are likely to be certain annual costs you will be required to pay, such as ground rent, while you will also be required to contribute towards maintenance and service charges. Should the lease expire then the full ownership of the property will revert back to the freeholder?
Leasehold is usually reserved for flats and apartments, however, this is not always the case and many older properties are on leaseholds, but recent years have seen a number of new-build houses sold in this way. The Government has now banned this practice, ensuring that all new-build homes are sold as freehold.
The cons of leasehold ownership
There are a lot of potential problems with leasehold ownership, not least because of short leases or those with strict terms that make the property hard to sell or remortgage.
Rising ground rents that become unmanageable – Some leasehold clauses mean the ground rent doubles every 10 years, turning a bill of several hundred per year into thousands of pounds.
Expensive service charges – The service charge usually covers the cost to the landlord of general maintenance, repairs and buildings insurance. Your lease will outline what the landlord can and cannot charge you for. These charges can be extremely high and may be off-putting to potential buyers.
Developers selling off the freehold – new freeholders may actively look to increase the charges to the leaseholder, costing you money and affecting your ability to sell on the open market. This is why Gaffsy is a viable option for selling a leasehold, it is fast – You can sell much quicker than you would when comparing against the timeframe associated with estate agents.
Selling a leasehold property
- Buy the freehold
If you are a leaseholder, then there is the option of attempting to purchase the freehold of your property. If your property is a flat, you may be able to buy a share of the freehold, which you would own alongside the other flat owners. If the property is a house you may be able to buy the full freehold. This is a convoluted and cost-heavy way to sell your property, the better way would be to use a cash buying house service, such as Gaffsy, which is the cheapest way to sell your property, avoiding costs such as agents’ fees, estate agent’s charges, solicitors’ fees, clearance costs, utility charges, mortgage payments and cosmetic repair costs.
- Use Gaffsy
A reputable quick house sale company will operate as cash house buyers. Gaffsy can get your house valuation quickly, and complete on your house sale fast with no fees. Don’t leave it too late to sell as a short lease may be problematic for any buyer. If we make you an offer you are happy with, our team of experts can manage the entire sales process remotely. We will work with you to complete the transaction in accordance with your preferred timescale.