When owning a property, you will either own the freehold of the property or a leasehold of the property. There are some cases when you can own both but, in most cases,, it will be one or the other.
It is very important that you know which one you own, as it will have a big impact on your rights.
If you own the freehold of the property, you own the whole of it. The important thing to note about a freehold is it attached to the ground. Therefore, you own your plot of land and all the ground below it and all the sky above it.
If you own the freehold, you own the property and the land outright, and with that right comes the responsibility to maintain the property and ensure it is in a good state of repair.
If you own a leasehold, you will only own a part of a property and not the full property itself. This is very common when purchasing a flat. You will not own the whole flat block but only your flat. Therefore, it is likely you will be buying a long leasehold.
The important thing to note with leaseholds, is they all have an expiry date. This may not be for hundreds of years but there is always a date in with the current leasehold will expire and the freehold owner will have the decision to grant a new one.
Especially in respect of flats, the leases granted can be around 999 years but is is very important that you do not take this for granted and you are sure how many years are left on the leasehold before you buy the property. If the leasehold is on the short side, be sure to factor in the cost of extending this, which the freeholder is free to fix.
Not only must you factor this is for your future outlay, but a shorter lease may affect your ability to get a mortgage on a leasehold, as lenders like the lease term to run way past their mortgage time frame. On the flipside, if you are looking to sell a leasehold, you need to be aware of this to, for your future buyers.
Others points of note are the likelihood of increased costs, such as service charge, ground rent and management company fees which do not exist when purchasing a freehold.
When weighing up which is the best option for you, it all depends on your situation. If you need any further advice, please get in touch with the property team at Lawdit.