Leasehold or Freehold
Firstly, let’s talk about the difference between the two. A freeholder of a property owns it outright, including the land that it’s built on. If you buy a freehold property it means you own everything – the bricks, mortar and the land, so it’s your responsibility to maintain both the property and the land. Most houses are generally freehold, but some might be leasehold. This is often through shared ownership schemes. Being a leaseholder means you own the property but not the land, so before making an offer on a leasehold property you’ll need to consider how many years are left on the lease and how the length of the lease might affect getting a mortgage.
Buying a leasehold property often includes a service charge. The charges will vary from property to property but they are often to pay for things like maintaining communal gardens, electricity bills for communal areas or repairs and maintenance to exterior walls. Leasehold lengths can vary but typically a new lease will start off at around 99 years, but some leases do run for as long as 999 years.
When the term of a leasehold goes down to zero years, then the property reverts to the freeholder. So, if you have a 40-year leasehold you only have the right to use the property for 40 years before it goes back to the freeholder. This means that it’s important to renew your lease in order for the property to maintain its value.
Should you avoid buying a leasehold property?
Absolutely not. Leasehold properties in Cornwall are more frequently flats. So, if you’re looking to purchase a flat in Cornwall it’s likely that the flat will be leasehold. All you need to look for when purchasing a property like this is the length of the lease. Make sure the lease is more than 90 years. If the lease is over 90 years your property is likely to maintain its value, plus mortgage providers will be happy to lend to you. When you are the property owner (you normally have to have owned the property for 2 years) you have the right to extend your lease. To do this, you’ll need to liaise with your landlord.
There can sometimes be a range of perks to owning a leasehold property, particularly if it’s in a block. Some flats will include access to a gym, have use of communal areas, parking or a concierge. This is what you will pay for within your ground rent and can often make a big difference.
If you’re interested in a property but you’re not sure what is best suited to you, feel free to speak to one of our property advisers. They’ll be able to offer advice and answer any questions you may have around freehold, leasehold and the sale of a property.
Top tip checklist:
1. If purchasing a freehold property, always find out the length of the lease
2. Check the terms of your lease
3. If there aren’t many years left on the lease, find out the cost of extending it
4. Be realistic with your expectation and timescale – purchasing a home can take time
5. If buying leasehold, chat to the neighbours