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Guilherme Mazui

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What is the Difference Between Leasehold and Freehold?

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The main difference between leasehold and freehold lies in the ownership of the land on which the property is built. Here are the key differences between the two:

Leasehold:

  • The leaseholder owns the property for a fixed period of time, usually 999 years or 125 years, but not the land it is built on.
  • The land is owned by the freeholder (also known as the landlord).
  • The leaseholder is responsible for the maintenance and repair of the building.
  • Leasehold properties are most commonly flats, but some houses can also be leasehold, typically through shared-ownership schemes.
  • Leaseholders can extend their lease fairly easily for up to 990 years if at least half of the leaseholders agree to buy a share in the freehold.

Freehold:

  • The freeholder owns the property and the land it is built on outright.
  • Freehold properties are usually houses, but some flats can also be freehold.
  • The freeholder is responsible for maintaining the property and land.
  • Freeholders do not have to worry about the lease running out, deal with the freeholder, or pay ground rent, service charges, or other landlord charges.

In summary, leasehold properties are owned for a fixed period of time, and the land is owned by the freeholder, while freehold properties are owned outright, including the land they are built on. This distinction affects the costs and responsibilities associated with owning a property, so it is essential to understand the difference before purchasing a home.

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  • What is the Difference Between Leasehold and Freehold?
  • Comparative Table: Leasehold vs Freehold

    • Comparative Table: Leasehold vs Freehold

    The main difference between leasehold and freehold properties lies in the ownership structure. Here is a comparison table highlighting the key differences between the two:

    Feature Leasehold Freehold
    Ownership Rights The owner permits the lessee to hold the property for a limited period. The owner owns the property outright.
    Tenure Generally, the lease has a fixed term, and the property reverts back to the landlord or freeholder once the lease expires. The owner has the property for an indefinite length of time, which covers both the land and the property.
    Costs Leasehold properties are usually cheaper compared to freehold properties. However, lease renewal charges can be high. Freehold properties are more expensive than leasehold properties. There are also costs associated with buying the freehold, such as stamp duty and legal fees.
    Restrictions Leasehold properties come with various restrictions put by the lessor or landlord, such as permission for alterations or construction. Freehold properties have no restrictions on whom to transfer, what to alter, or what to build on the property.
    Responsibilities Leasehold property owners are responsible for maintaining the property within the terms of the lease agreement and may have to pay maintenance and service charges to the landlord. Freehold property owners are responsible for maintaining the property and have more control over any alterations or construction.

    In summary, leasehold properties have a more limited ownership structure and typically involve paying rent or ground rent to the landlord, while freehold properties provide full ownership rights and responsibilities to the owner for an indefinite period.

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    Guilherme Mazui

    Guilherme Mazui is graduated in journalism from the Federal University of Minas Gerais (UFMG) and a master's degree in Communication from the University of São Paulo (USP). In addition, he has experience in advertising writing and has worked as a content editor in several companies.