DIFFERENCE BETWEEN LEASEHOLD AND FREEHOLD PROPERTY
Leasehold and freehold are two types of property ownership commonly found in many countries, including the UK, US, and Australia.
Freehold property is also known as fee simple ownership. It is the most common form of property ownership, where the owner has complete ownership and control over the land and the buildings on it. Freehold ownership provides the owner with the right to use, occupy, sell, rent, or transfer the property as they see fit.
On the other hand, leasehold property is a type of ownership where the owner has the right to use and occupy the property for a specified period of time, as outlined in a lease agreement. The owner of a leasehold property does not own the land or building outright, but rather has a leasehold interest in the property. The lease may be for a short-term, such as 99 years, or a longer term, such as 999 years.
The leasehold ownership structure is commonly used in apartment buildings or in commercial properties, where the owner of the land leases the property to multiple tenants. In this case, the leaseholders pay rent to the landowner, who is responsible for maintaining the property and the building.
The main difference between leasehold and freehold property is that leasehold property has an expiration date. Once the lease term is over, the property reverts back to the freehold owner or the landlord. In contrast, freehold property does not have an expiration date and provides the owner with complete control over the property for as long as they own it.
Leasehold ownership may offer some advantages, such as a lower initial purchase price or access to properties that may be otherwise unaffordable. However, it also comes with some restrictions, such as limitations on renovations or alterations that can be made to the property, and potentially high ground rent or service charges that the leaseholder must pay.
Definition: Freehold property ownership means that you own the land and any buildings on it outright, indefinitely, and with full legal rights. You can live in it or rent it out, renovate or rebuild, and sell it at any time. Leasehold property ownership, on the other hand, means that you own the property only for a specific period of time, usually decades, and typically you have to pay rent to the freeholder or landlord who owns the land on which the property sits.
- Duration: Freehold ownership is usually permanent, meaning you can hold it for as long as you wish. In contrast, leasehold ownership has a set term, typically ranging from 99 to 999 years. Once the lease period ends, ownership reverts to the freeholder.
- Maintenance: When it comes to maintaining the property, freehold owners are responsible for all aspects, including the land and buildings on it. For leasehold ownership, the lease agreement may stipulate who is responsible for maintenance and repairs, which could be the leaseholder or the freeholder.
- Ground rent: Leasehold properties typically require the payment of ground rent to the freeholder, which can be fixed or variable, and can increase over time. Freehold properties have no such obligation.
- Flexibility: Freehold ownership offers greater flexibility in terms of renovating, extending or altering the property as you see fit. With leasehold, the lease agreement may place restrictions on what changes you can make or require you to seek permission from the freeholder first.
- Cost: Freehold ownership usually has a higher upfront cost than leasehold, as you are buying the property outright, but there are no ongoing ground rent or lease extension costs. Leasehold ownership typically has a lower upfront cost, but the ground rent and lease extension costs can add up over time.
The key differences between leasehold and freehold property are:
- Ownership: In a freehold property, the owner has complete ownership and control over the land and buildings on it. In contrast, leasehold property owners only have a right to occupy and use the property for a specified period of time.
- Duration: Freehold ownership is indefinite and does not have an expiration date, while leasehold ownership is for a specific period of time, as outlined in a lease agreement.
- Responsibilities: Freehold owners are responsible for maintaining their property and paying for any repairs or renovations themselves. In contrast, leasehold owners may have to pay additional fees or ground rent to the freeholder or landlord for maintenance and upkeep of the property.
- Restrictions: Leasehold owners may be subject to certain restrictions, such as limitations on alterations or renovations, or may require permission from the landlord or freeholder to make changes to the property. Freehold owners have no such restrictions on their property.
- Transferability: Freehold ownership provides complete freedom to sell or transfer the property as the owner wishes. Leasehold ownership, on the other hand, may have restrictions on the transfer of ownership, such as requiring the landlord’s consent or having to pay additional fees or charges.
In summary, freehold ownership provides complete ownership and control over the property, while leasehold ownership is limited to a specific time period and comes with additional responsibilities and restrictions.
FOR MANY MORE UPDATES AVAILABLE CLICK BELOW
CLICK THE BELOW LINK TO READ THE COMPLETE CONTENTS
SOME CONTENTS OF THIS WEBSITE ARE FOR GOLD SUBSCRIBERS ONLY.
Join us as a GOLD SUBSCRIBER and get access to read important books.
KIND ATTENTION
We are going to close all what’s groups of CEV soon due to difficulties in posting information or message in more than 5 groups of CEV at a time.
All future posts of empanelment notices & professional importance will be shared on
1. https://t.me/+dbHNkNO22xsyYTY1
2. www.valuerworld.com
3. The Twitter handle of CEV India
https://twitter.com/cevindia?t=XbqlvnwUVz1G3uPgs749ww&s=09
after closing the groups.
All members of these groups are requested to register themselves at the following link immediately for Getting all related timely updates