What is the Difference Between Freehold & Leasehold?
If you are looking to buy a property, you may have heard of the terms freehold and leasehold. The key differences are:
- Freehold = You own the property and the land it is built on for as long as you want.
- Leasehold = You own the property for a set period of time, but not the land it is built on.
Owning a Leasehold Property
If you own a leasehold flat or house there will be the superior interest of your Landlord, known as the reversionary title, out of which your lease was granted. Your lease will include a requirement to pay rent to your Landlord, although the rent may only be a small amount.
What is a Reversionary Title?
Reversionary titles are often owned by companies. If one of these companies dissolves, the title that it owns may vest in the Crown as Bona Vacantia. The Bona Vacantia division (BVD) of the Government Legal Department deals with such titles that belonged to a dissolved company and now belong to the Crown.
What Does Owning a Leasehold Property Mean?
Owning a leasehold means you may have less control over your property than freeholders would, and you may be paying more. For example, as a leaseholder, you will have to pay ground rent, and usually, a service charge to your landlord.
Why Buy Freehold?
Buying a freehold means that you will not have to pay ground rent or be under a contract of conditions imposed by your lease. A leasehold will eventually diminish in value as the term shortens, which will make your property harder to sell and reduce your options for remortgaging. Therefore, buying freehold outright or buying the freehold of your leasehold property is always a preferable option.
How to Get My Landlord to Sell me Freehold
You may have the legal right to buy the freehold of your property even if your landlord does not agree. Our solicitors can explain to you the rules for eligibility, however, the basics include:
- Your property must be a house
- Your lease must be for a term of more than 21 years
- You must have owned the house for the preceding 2 years.
If you are buying a leasehold house from a previous owner, it can be possible for the seller to inform the landlord and provide the appropriate notice and transfer the benefit to you. This would mean you would not have to wait 2 years to start the process.
How Much Will it Cost to Buy my Freehold?
The cost of buying your freehold depends upon the premium and professional fees. The premium is the price you pay to the landlord to buy out the interest, which will reflect the market value of the freehold and the loss of ground rent to the landlord.
How Long Will it Take to Buy my Freehold?
The typical time frame for buying a freehold takes between 6 and 12 months but can depend on several factors.
Contact us or call us on 0114 2743 481 to book your appointment today.
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