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Knight West, your local Colchester estate agents, explain the differences between Leasehold and Freehold properties.

 
When looking to purchase a property you may have noticed that all properties are classed under one of two categories – leasehold or freehold. Understanding the difference between the two is very important and can often help you make a more informed purchasing decision.
 
We’ve put together a quick guide explaining the differences between Leasehold and Freehold to help you discern between the two.
 
The main differences
The most important thing to understand about a leasehold property is that when purchasing leasehold you own the property, but not the land that it resides on
 
However, with a freehold property you own the building as well as the land. Traditionally, within the UK, houses tend to be sold as freehold properties and the majority of flats are leasehold.
 
Owning a leasehold property
With leasehold properties a landlord – otherwise known as the ‘freeholder’ -owns the land on which the building is built on. 
 
The freeholder determines the length of time you will own the property for, by signing a lease agreement. Once the lease expires, the freeholder will own the property. 
 
If you own a leasehold property you will pay a small amount of ground rent to the freeholder, who will therefore be responsible for maintaining and running the building.
 
What is a lease?
A lease is a legal agreement between yourself and the freeholder, which determines how long you will have ownership of a property. Once this has expired, ownership will revert back to the freeholder.
 
Traditionally a residential lease lasts up to 125 years – although it is possible for leases to last up to 999 years.
 
If you are considering buying leasehold we highly recommend checking how many years are left on the lease – as if a property has less than 80 years left it can be tricky to get a mortgage.
 
Once you’ve owned a property for two years, it is possible to extend the lease. To do so, you’ll have to pay the freeholder a fee.
 
It is also possible, when living in a block of flats, to team up with other leaseholders to buy the freehold – meaning you’ll all own a share.
 
Owning a freehold property
Purchasing a freehold property means you’ll legally own both the property and the land it stands on. This means that there’ll be absolutely no limit on your ownership. 
 
However, this also means that you are fully responsible for the building and any related costs – this can be great if you’re considering building on or extending a property.
 
So, what’s the right decision?
As long as you are well informed when buying a leasehold property, there is no reason to be put off. It’s important to research into any additional service charges that can be incurred with a leasehold, as well as how many years are left on the leasehold.
 
If you are in a position where you’re considering extending a property then we’d recommend opting for a freehold property, which will give you free reign.

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