Freehold vs Leasehold: What's the Difference? 

Freehold. Leasehold. Ground rent. Service charge. Years remaining on the lease.

If you're a first-time buyer, it can feel like you're learning an entirely new language.

So let's simplify it.

What does freehold mean?

With a freehold property, you generally own the property and the land it stands on.

Most houses are freehold, although there are exceptions.

As the freeholder, you're generally responsible for maintaining the property and land.

Simple enough.

Leasehold is slightly different

With a leasehold property, you're buying the right to occupy the property for the length of the lease.

This is particularly common with flats.

The building and land are generally owned by the freeholder, while the leaseholder owns the property for the period specified by the lease.

Why does the length of the lease matter?

This is one of the most important things to investigate when buying a leasehold property.

A lease with many years remaining is very different from one approaching a significantly shorter term.

The remaining lease length can affect mortgageability and future saleability, so buyers should understand exactly what they're purchasing.

Your solicitor will investigate this as part of the legal process.

What is a service charge?

If you're buying a flat, there may be a service charge.

This can contribute towards maintaining communal areas and the wider building.

For example, it might cover cleaning communal spaces, maintaining gardens, buildings insurance or other shared costs.

The amount can vary considerably from one property to another.

And ground rent?

Some leases also include ground rent payable to the freeholder.

The terms will depend on the individual lease.

Again, this is something your solicitor will investigate and explain to you.

What should you ask before buying?

If you're considering a leasehold property, don't be afraid to ask questions.

You'll want to understand:

• How long is left on the lease?

• What is the current service charge?

• Is there ground rent?

• Are there any planned major works?

• What does the service charge cover?

• Are there restrictions within the lease?

• Who is responsible for repairs?

Is leasehold automatically a bad thing?

No.

Leasehold properties can be excellent homes.

For many buyers, particularly those looking for a flat in a convenient location, leasehold is simply part of the way the property is structured.

The important thing is understanding the terms before you commit.

Don't rely on the estate agent for the legal detail

Your estate agent can provide information about the property and pass on details supplied by the seller.

But your solicitor is the person who should advise you on the legal implications of the lease.

If you're unsure about something, ask.

It's much better to understand an issue before exchange than discover it afterwards.

The bottom line

Freehold and leasehold aren't simply labels.

They tell you something important about what you're actually buying and what responsibilities come with it.

If you're considering a leasehold property, make sure you've read the information carefully and had your solicitor review the lease before committing to the purchase.