What is the difference between Leasehold and Freehold?
Nov 3rd, 2008 | By admin | Category: property adviceWhen you buy a property it will either be leasehold or freehold, but what does this mean for you the buyer?
Freehold
If you purchase a house then your property is likely to be freehold. This means you legally own the house and its grounds and are responsible for the maintenance and upkeep of it. If the house has been converted to flats then all the owners collectively are likely to own the freehold.
Leasehold
If you are buying a flat then it is more than likely to be leasehold. This means that when you purchase the property you are buying a lease to live in the property for a given amount of time. When purchasing a purpose built flat usually the actual owner of the building is the person or company who owns the freehold, this is why you have to pay ground rent on a purpose built flat.
The person or company who owns the freehold for your flat is responsible for maintain the building and making sure that it is kept in good condition. You will however incur a service charge. The service charge paid on your flat will cover your buildings insurance, cleaning and general maintenance of the block.
If any repair work or redecoration is needed to the building, then the leaseholders of the building will have to chip in to get the work done. Sometimes the leaseholders have a central pot of money that they accrue by over paying their service charge and keep it in a bank account for these occasions. Always check who is responsible for building maintenance when you purchase your flat.
The freeholder of your property may be responsible but sometimes they are not. If you have problems with poor maintenance, bad workmanship, inflated bills and poor management you can get all the other leaseholders in your block together and go to your local leasehold valuation tribunal. This is an organisation that deals with disputes relating to service charges and the purchase of leasehold property.
If you continue to get poor maintenance service from the freeholder you can check to see whether the other owners in the block want to buy out the freeholder. This will mean that the residents have control over the property maintenance.
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