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Freehold vs leasehold

Freehold vs LeaseholdDifference Between Freehold and Leasehold

When buying your first house, you’ll need to know whether the property is freehold or leasehold and understand how that affects you.

When it comes to purchasing your first home, there is a lot to consider.

Knowing whether the property you’re interested in is leasehold or freehold is important.

This is basically your level of ownership over the property. Each level of ownership carries its own responsibilities and has an effect on the cost to purchase and sell the property.

There are a lot of places to find houses. However, Bin Saeed is the most popular and is in high demand.

Generally speaking, houses tend to be freeholds, and flats and apartments tend to be leaseholds. However, that’s not always the case. That would be a bit straightforward, wouldn’t it?

Suppose people living in a house set up a shared ownership scheme and the house becomes leasehold.

What is a freehold?

Owning a freehold means that your house belongs to you outright. And that includes the land on which it was built.

Keep a good eye on the property. If you skip out on the maintenance, it’ll probably cost more later when things inevitably deteriorate or break. It will also slow down the house’s ability to sell.

Freehold vs leaseholdHow do leaseholds work?

The leasehold is a bit more complicated. In this case, you only own the property for a specific period of time, subject to the terms and conditions of the lease.

It is normal for the landlord to pass the leasehold on to you. Meanwhile, you’ll remain the proprietor of the property and the land it’s located on.

Under the theory, the property reverts to its freeholder when the lease runs out. But in practice, landlords usually extend the lease.

A property owner must have owned the property for two years to extend a lease. A tenant must also be a qualified tenant so the lease has to have been at least 21 years when the property is bought.

You can extend your lease after owning a property for 2 years by 90 years. That might sound like a lot, but it would be hard to get a mortgage on a property whose lease is less than 70 years.

Buy a property with a short lease-hold – it’s a gamble. Although you can extend a lease-hold, you will be charged by the freeholder for this. And the shorter the lease term, the more expensive the extension will be likely to be.

Extending the lease beyond 80 years is also a wise decision if you intend to sell the property.

Do leases work in the same way as rentals?

The freeholder owns the building, but you’ll own your portion of the property. So, you are still a homeowner even though you own the leasehold.

As a result, if your home is leasehold, you’re currently on the property ladder.

Whether freehold or leasehold affects the cost?Lease Agreement

If you own a freehold property, you’ll have to pay mortgage payments and maintenance costs.

Freehold properties are often more expensive than tenements because you get more space with a house than a flat.

The difference between leaseholds and freeholds is that leaseholds have ongoing charges.

The freeholder is required to take care of the building, and the cost of the maintenance is split equally between the leaseholders.

The cost may include things like taking care of shared areas, paying for any utilities, gardening, and fixing any damages to the building.

If you are considering purchasing a leasehold property, find out whether the seller will charge service charges. Other fees may apply, such as the ground rent or fees for the service of your unit.

Besides paying your share of buildings insurance, there may also be additional services to pay.

You’ll probably also contribute to a sinking fund. This is what you’ll do if you run into any unexpected expenditures.

In addition, the cost of legal paperwork, or conveyancing, is normally higher for leasehold properties since the law regarding property contracts is much simpler.

What is the share of freehold?

A leaseholder can also cover their rental payments using a share of freehold arrangement.

The freehold can be divided among all the leaseholders if at least half of the leaseholders agree to it.

Sharing the freehold can be expensive, but then again, if you share the costs, you have more control over ongoing expenses.

You will have more control over the entire building if the flat is freehold.

A good tip when choosing between leasehold and freeholdTip to Choose between Freehold and Leasehold

You should consider every possible aspect before you purchase.

If you purchase a freehold property, do you plan to keep up with the costs of maintenance?

If you are planning on getting a flat, is it easy to extend the lease? What about clashing with other leaseholders? Extending the lease can potentially be risky.

When comparing costs, we believe it’s best to look at them in the longer term.

Leasehold properties are typically cheaper to buy, but the additional costs and charges can accumulate over time. With that said, be diligent when you do your sums!

For more detail or if you have any query contact: Mehroz Saeed (+92) 321-2828289 or visit


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