When buying or selling a home, a key piece of information you need to know is how the property is legally owned, as this can influence your control and costs over the home.
There are two main ways properties are owned in England and Wales.
Freehold is the easiest to explain. When you buy and own a freehold property, you own the building and the land it sits on.
With leasehold, it’s different and although some houses are leasehold, it tends to apply mainly to flats. When you own a leasehold flat, you own the ‘inside’ of the property and everything else is owned by a freeholder (also referred to as the “landlord”) for a set period of time, such as 99 to 999 years. This includes things like the communal areas and even the windows in the property.
There are six main reasons why you need to understand the type of tenure you own, when you are buying or selling:
When comparing freehold to leasehold, it can appear that freehold can be a better purchase or easier to rent as the landlord has control over fixing problems – which they won’t always be in a flat. However, the property’s price often reflects the difference, so you may pay less for a leasehold property which can make it a worthwhile purchase.
There is more good news on the horizon for leaseholders too as things are about to get much fairer in England and Wales thanks to changes the Government are making and planning. These include:
Future proposals and plans are to:
Commonhold is a third type of tenure that is currently being reformed by the Government.
Commonhold offers a different type of ownership for new and existing flat owners. It enables them to purchase the freehold of the property and rather than own a property for a fixed period of time, commonhold owners own the property with no time limit.
Those that own via commonhold effectively manage and own the building as a “collective”. They can do this themselves or appoint their own managing agent. This type of ownership allows those that own the properties to be responsible for the costs and management of the building.
If you’re looking to buy or sell a property, get in touch with your local branch for a free valuation.
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