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Freehold property

Complete ownership

Freehold means you own both the property and the land it sits on outright.
This form of ownership provides complete control over the property, allowing you to make changes without needing permission from a freeholder or landlord.
Most houses in the UK are sold as freehold properties.

Lack of
ongoing fees

One of the key advantages of freehold properties is that there are no ground rent or service charges to pay.
This can result in substantial savings over time, as you are not subject to regular payments beyond the usual maintenance costs and buildings insurance.

Responsibilities

Owning a property freehold comes with responsibilities. You are solely responsible for maintaining the entire property, including the exterior walls, roof, and any communal areas. It’s essential to budget for these maintenance costs to ensure the property remains in good condition.

Leasehold property

Limited ownership

Leasehold ownership means you have the right to occupy a property for a specified period, known as the lease term, but not the land it sits on.
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When the lease expires, ownership of the property reverts to the freeholder. Leasehold properties are common for flats and some houses.

Ongoing fees

Leaseholders must pay ground rent and may also incur service charges and maintenance fees for the upkeep of communal areas and building insurance.
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These ongoing costs can add up, making leasehold ownership potentially more expensive over the long term.

Additionally, leasehold properties often involve admin fees for tasks like obtaining written permission for alterations.

Responsibilities and restrictions

While leaseholders have less responsibility for major repairs and maintenance compared to freeholders, they face restrictions imposed by the lease terms.

For example, leaseholders may need permission from the freeholder to make significant changes to the property, and there can be rules about pets or subletting.

Key differences between freehold and leasehold properties

Duration of ownership

The most significant difference between freehold and leasehold properties is the duration of ownership.
Freehold provides indefinite ownership, whereas a property leasehold is limited to the lease term, which can range from a few decades to several centuries.
Shorter leases can be less attractive to home buyers and mortgage lenders, often requiring renewal or extension at a cost.

Financial implications

Freehold properties involve fewer ongoing costs, as there are no ground rents or service charges. Conversely, leasehold properties come with additional financial commitments, such as ground rent and service charge payments, which can impact your overall financial circumstances.

Control and flexibility

Freehold ownership offers greater control and flexibility over the property, allowing for modifications and extensions without the need for permission.
Leaseholders, however, must adhere to the lease terms and seek approval for significant changes, which can be a more restrictive and sometimes expensive process.

Maintenance responsibilities

With freehold properties, the owner is responsible for all maintenance and repair costs.
Leaseholders, while generally responsible for internal upkeep, share the maintenance costs of communal areas and the building with other leaseholders through service charges managed by a management company.

What are your long-term goals?

Choosing between leasehold or freehold property depends largely on your financial circumstances and long-term property ownership goals.
While freehold properties offer complete ownership and fewer ongoing costs, leasehold properties can provide a viable option, particularly for flats and retirement properties, albeit with more restrictions and additional fees.
Maritime Capital specialise in helping high net worth individuals navigate the complexities of property ownership in the UK.
Whether you are considering a freehold or leasehold property, our expertise ensures you make informed decisions tailored to your needs.
Contact us to learn how we can support you with your property investments.

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