What is freehold?
Freehold is the complete ownership of a piece of land and that which is built upon it – the owner ‘holds’ it ‘freely’. When buying a freehold property you are completely in charge of the building, what happens to it, how it’s used and it is your responsibility for any repairs or upkeep. This is in comparison to leasehold
, where you own the property, but the land the property on is being ‘leased’ from the leaseholder.
When buying a freehold property, you are buying the entirety of the land, and the property on it. However, this doesn’t mean you will be exempt if you are working on a project that requires planning permission.
The advantages of a freehold
Freeholds are usually houses. The advantage of a freehold property is that you have complete control over it, and are not subject to any further payments, like ground rents, service charges or admin fees, which can be the case with leasehold properties. When you buy a freehold property, you can know exactly what you’re paying, there is no relationship with any other owner, and you know you will not be subject to any charges in the future. There will be no limitations on what you can do with your home (smoking, pets, building work) as there may be with a leasehold property. There is also no time limit to worry about – with a leasehold there can be a countdown to a possibly expensive renewal, or a fear of decreasing value as the lease runs out, whereas buying freehold is permanent.
The disadvantages of a freehold
Freeholds are often more expensive, as you own the land as well as the property. They also usually refer to houses rather than flats, so trying to find a flat available for freehold purchase can be difficult. If you prefer communal living, such as being in an apartment complex with a gym or a concierge, a freehold is probably not for you.
Share of freehold/commonhold
In some cases with flats, you get a ‘share of freehold’ – this offers the advantage of buying permanently – there is no lease that can end and revert back to the freeholder. However, owning a portion of the freehold doesn’t mean the lease is void. It really means you have two responsibilities. You will have more say in the upkeep of the building and land, but if you have a share of freehold in a group of flats, you may find yourself at odds with the neighbouring leaseholders when it comes to arranging repairs work and paying for it.
Commonhold is a share of freehold, but usually means that the other leaseholders in the building are also freeholders. Together, you hold the freehold for the building and can decide together about maintenance costs or repairs.
Flying freehold and creeping freehold
These two terms refer to parts of the property that are owned by one party, but appear to infringe on another freeholder. So this could be a balcony that extends over another property (flying), or a cellar that extends beneath it (creeping). In some cases these types of freehold can be problematic, as even if there is a clear freeholder, the part of the property will have an effect on others, and could cause contention.
What is feuhold?
Scotland has a different system to the rest of the UK
. They abolished Feudal Tenure in 2004, which meant that long term leases turned into freehold. There are very few leasehold properties in Scotland.
How to buy freehold
Buying a freehold property often seems easier, as you know exactly what you’re getting, there will not be anything to do further down the line (like renewing a lease) and you can be entirely responsible for your own property and what you do there. Ensure when you look at properties (particularly new builds or flats) you know that you are purchasing the freehold for the property. Check any boundaries and discuss any flying freehold issues with your conveyancing solicitor. If you are buying a share of the freehold, ask what repairs have been made, what the relationship is like with the other freeholders and how any decisions are reached with regards to the property.
Whether buying leasehold or freehold, make sure you thoroughly research the property and any fees that might be attached to the property. Always hire an experienced Chartered Surveyor to thoroughly assess the property and check any changes, updates or issues that may arise with the building or surrounding land.
Published February 2018