When most people think about buying property, their minds typically go straight to the house itself – the layout, the rooms, the garden. But what about the land it is sitting on? Understanding the difference between freehold and leasehold ownership is key to knowing exactly what you are buying and the rights that come with it. Let’s dive into what these terms mean and why they matter!
Freehold Ownership: The land is yours, all of It.
When you buy a freehold property, you own the building and the land it sits on. The most common form of freehold ownership is “fee simple” – which, in legal terms, means you have the right to use and enjoy the land for an indefinite period, as long as you (or your heirs) wish to hold onto it.
Freehold ownership is perpetual – it lasts as long as you want it to. You can transfer the ownership to someone else, sell it, or pass it down through generations. If the owner dies without heirs or successors, the land reverts to the government. But until then, the land is yours to keep.
Leasehold Ownership: Renting the land
Leasehold is a bit different. With a leasehold property, you gain exclusive use of the property/building for a fixed term, usually up to 99 years or less. When the lease term expires, both the property and building revert to the lessor unless you negotiate a lease extension. Moreover, lessees have to pay annual ground rent to the lessor, and that ground rent can increase over time.
Freehold vs. Leasehold: Which Is Right for You?
Choosing between freehold and leasehold depends on your long-term plans. To help you decide, here’s a quick comparison:
| Aspect | Freehold | Leasehold |
| Ownership | Full ownership of property and land | Right to occupy for a fixed term |
| Duration | Permanent | Limited term, e.g., 99 years or less |
| Ground Rent | None | Usually payable, and may increase. |
| Lease Renewal | Not applicable | May need to pay for the extension. |
| Control | Full control over the Property | Restrictions on changes/alterations. |
| Inheritance | Can be freely inherited | Inherited but may have reduced value if lease term is short. |
Conclusion.
Whether you choose freehold or leasehold, understanding the land beneath your feet is crucial. So, when you are looking at that dream property, remember: it’s not just about where you live – it’s about how you live there!
Please contact us at info@cfllegal.com should you require further information.
