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What is a freehold property?

When it comes to property ownership, understanding the difference between freehold and leasehold properties can be a complex process.

In the realm of property investment, the term 'freehold property' is often heard, but what does it mean if a property is freehold?

Simply put, a freehold property is one where the owner has complete ownership of the land it sits on and the building itself.

The meaning of freehold property

Freehold property refers to any estate which is "free from hold" or owned outright. The owner of the freehold, the freeholder, controls and owns the 'whole property' - the building and the land it sits on.

There's no time limit on how long they can own the property, because they own it outright. This contrasts with leasehold properties where the property is only owned for a fixed period.

The advantage of freehold ownership is that it allows the owner full control over the property, including the land and any buildings on it.

This means they're not subject to ground rent, service charges, or any other leaseholder obligations. However, they are responsible for all maintenance costs and building insurance.

With a freehold, the owner has the right to use the property for any lawful purpose. They can modify it, sell it, or transfer it without any restrictions.

Is it good to buy a freehold property?

When considering whether to buy a freehold property, it's worth noting the significant advantages. Freehold properties tend to have more stability in property prices and can offer an easier buying process as you don't have to deal with a landlord or pay annual charges like ground rent and service charges.

However, the conveyancing fees may be higher as the conveyancing solicitor has to do more work when dealing with freehold properties.

You may also need to get planning permission for major works or significant changes, which can be a more complex process.

Freehold vs leasehold property

The key difference between freehold and leasehold property lies in the ownership and responsibilities of the land. With a freehold property, you own the property and the land it sits on outright.

In contrast, with a leasehold arrangement, you only own the property for the length of the lease agreement.

Leaseholders may have to pay ground rent, annual service charges and admin fees, especially if the property has communal areas. These costs can add up over time and are not always apparent at the time of purchase.

Leasehold properties also come with restrictions, such as obtaining permission from the landlord for major works or alterations.

Furthermore, when the lease runs out on leasehold properties, ownership can revert to the freeholder unless the lease is extended, which can involve additional fees.

In some cases, leaseholders can buy the freehold, but this is often a complex process involving lease extension, conveyancing fees, and potentially, negotiations with the landlord.

It's crucial to seek professional advice before embarking on this process. Mortgage lenders may also be more reluctant to lend on leasehold properties with short leases, which could impact the value of the property.

Advantages of freehold property

Full control: You have complete control over your property.

No annual ground rent: Unlike leasehold properties, there are no annual charges to pay.

Long-term investment: A freehold property can be passed down through generations.

FREEHOLD PROPERTY FAQS

What are the responsibilities of a freehold property owner?
A freehold property owner is responsible for maintaining the property and paying all costs associated with it, including property taxes and insurance.

Can a freehold property be sold?

Yes, a freehold property can be sold or transferred without any restrictions.

Is a freehold property a good investment?

A freehold property can be a great long-term investment as it can be passed down through generations. However, like all investments, it's important to do your research and consider all factors.

Are there any restrictions on what I can do with a freehold property?

Generally, as a freeholder, you have the freedom to do as you wish with your property. However, it's important to note that any major changes or renovations may require planning permission from your local council. It's always best to check before starting any significant work.

Can a freehold property be leased?

Yes, if you own a freehold property, you can choose to lease it out. You will retain ownership of the property and land, but the leaseholder will have the right to use the property for the length of the lease agreement.

What happens to a freehold property when the owner dies?

In most cases, a freehold property will be passed on according to the owner's will. If no will is in place, the property will be distributed according to the rules of intestacy. It's recommended to seek legal advice to understand the specifics.

How can I find out if a property is freehold?

You can check the property's title deeds or consult the Land Registry to determine if a property is freehold.

Can a freehold property be converted into a leasehold?

Though not common, it's technically possible to convert a freehold property into one or more leaseholds. This is often seen when a freeholder decides to split a large property into several smaller units for lease. Legal advice should be sought for such conversions.
Maritime Capital are wealth guardians specialising in UK property, looking after family offices and private clients. We offer a bespoke service for those that don’t wish to deal with the daily tasks of asset management – but do want to remain firmly in control.

As a trusted family-run team we can provide the guidance and expertise needed to navigate through the maze of freehold properties. Get in touch.

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