Freehold or Leasehold Status
Is the Property Freehold or Leasehold? What exactly does that mean?
Is the property Freehold or Leasehold?
If you're a first-time buyer, this may be the first time you have heard of "Freehold" and "Leasehold". So what exactly does it mean? Well, in a nutshell, Freehold means that the owner of the property also owns the land the property is on and Leasehold means the land the property is on is owned by a "Ground Landlord". This landlord might be a local council, a developer, or an absentee landlord. A "lease" for leasehold is usually hundreds of years long and some of these leases go back decades or even centuries. In most cases, an annual rent would be due. Sometimes this rent is so small that the landlord does not even bother collecting the rent. If a property is Leasehold, the owner is entitled to "Buy the freehold" through the Property Registration Authority.
Why is it important to know if a property is Freehold or Leasehold?
If the property is Freehold, it makes things a lot simpler. When you purchase the property, you'll also get the Freehold. But if the property is Leasehold, your solicitor will need to investigate the terms of the lease. If there are less than 70 years remaining (this can vary by bank), a bank may require the owner to purchase the Freehold before lending against the property. Your solicitor will advise on your possible options if this is the case! Otherwise, it is generally fine to purchase a property which is Leasehold. In fact, in some cases - like apartments - the property owner will never be able to own the Freehold. If you purchase a Home Hunter Report, one of the items we will check for is to see if there is a record of the Freehold status of the property. Your solicitor will still need to do their own investigation during the sale agreed stage, but this gives you an early indication of the status!