MEANING AND DIFFERENCE BETWEEN LEASEHOLD AND FREEHOLD PROPERTY

Freehold Property:

• • A freehold property refers to real estate that is owned outright by the owner, including the land and any buildings or structures on it.
  • The owner of a freehold property has full ownership rights and can use, modify, and sell the property as they see fit, subject to local zoning and land use regulations.
  • Freehold ownership typically lasts indefinitely and can be passed on to heirs or sold to other parties without significant restrictions.

Leasehold Property:

• • A leasehold property, on the other hand, refers to real estate that is owned by one party (the freeholder or landlord) but is leased to another party (the leaseholder or tenant) for a specified period of time.
  • The leaseholder has the right to use and occupy the property for the duration of the lease agreement, which can vary in length from a few years to several decades.
  • While the leaseholder may have certain rights and responsibilities as outlined in the lease agreement, ultimate ownership of the property remains with the freeholder.
  • Leasehold properties are often subject to ground rent and may require the leaseholder to seek permission from the freeholder for certain alterations or improvements to the property.

Here are the key differences between leasehold and freehold property:

1. Ownership Rights:
   • Leasehold Property: In a leasehold property, the owner has the right to use and occupy the property for a specified period of time, as defined by the lease agreement with the freeholder (landlord). However, the land itself is owned by the freeholder, and the leaseholder only holds rights to the property for the duration of the lease.
   • Freehold Property: With freehold property ownership, the owner has outright ownership of both the land and any buildings or structures on it. The owner has full control over the property and can use it indefinitely, subject to any applicable laws or regulations.
2. Duration of Ownership:
   • Leasehold Property: The ownership of leasehold property is typically for a fixed term, which can range from a few years to several decades, depending on the terms of the lease agreement. At the end of the lease term, the ownership rights revert to the freeholder unless the lease is renewed.
   • Freehold Property: Freehold property ownership is perpetual, meaning the owner holds the property indefinitely, with no fixed term or expiry date. The property can be passed down through generations or sold at the owner’s discretion.
3. Responsibilities and Rights:
   • Leasehold Property: Leaseholders are often subject to certain restrictions and obligations outlined in the lease agreement, such as paying ground rent, service charges, and obtaining permission for certain alterations or improvements to the property. The freeholder typically retains control over major decisions affecting the property.
   • Freehold Property: Freehold property owners have more autonomy and control over their property. They are responsible for all aspects of property maintenance, including repairs, renovations, and compliance with local regulations.
4. Resale Value and Marketability:
   • Leasehold Property: The resale value of leasehold property may be influenced by factors such as the length of the remaining lease term, ground rent obligations, and restrictions imposed by the lease agreement. Properties with shorter lease terms may be less marketable and may depreciate in value over time.
   • Freehold Property: Freehold properties generally have higher resale value and are more attractive to buyers because of the perpetual ownership rights and greater degree of control over the property.