When it comes to buying a house, some people just do it with blind faith in that everything will go all right and others try to inform themselves. We recommend that you be in the second group. Because if you inform yourself, you will be more aware of the potential issues. Sadly, ignoring the issues will not make them disappear.
When one gets information about buying property, they will discover that there are two kinds of ownership: leasehold property and freehold property. In many cases you will not be able to choose because only one of the two options will be available. But it is worth it to know its meaning, so you know what you are acquiring with each of them.
What is a leasehold property?
Well, the concept is simple. With a leasehold property you own the structure such as a building, house, or flat, but you do not own the land on which it was built. This means that the owner of the land, usually the government, can charge you rent and can recover the property once the lease is over. The lease period of the land is usually large, and it is common to use numbers like 100 years, 150, or even 1000.
What is a freehold property?
A freehold property is one in which the ownership refers to both the built structure and the land.
In general, a freehold property is more convenient than a leasehold. In the case of flat buildings, the common solution is to have a common ownership of the land between the owners of the flats.
In the eyes of the law, with a leasehold you are not the owner of the full property even when you can sell your house or make works on it (though sometimes you will need a permit from the owner).
One thing that will make you easily understand that freehold is a better option is that banks usually do not agree to give mortgages to the owners of leaseholds in which the lease of the land has less than 25 years left.
A leasehold contract may be a solution to decrease the price of the trade when you acquire your new home, but it is important that you are aware of what you are doing. Actually, leaseholds are infamous between buyers because recently there were some cases in which they were misinformed or they misunderstood the buying terms.
If everything is clear and you decide to acquire a leasehold freely because for whatever reason it is more convenient for you, fair enough. You shall not experience any issues with it, and it is perfectly legal.
If you require any further information you can contact us and we can point you in the right direction.