DIFFERENCE BETWEEN LEASEHOLD AND FREEHOLD PROPERTY
Leasehold and freehold are two common types of property ownership in real estate. The main difference between these two types of ownership is the length of time for which the owner has a legal right to the property.
Freehold property ownership provides complete ownership of the land and the property that sits on it. The owner has full control over the property and can use it for any purpose they see fit. There is no time limit on the ownership of a freehold property, and the owner can sell it or pass it down to their heirs as they see fit.
Leasehold property ownership, on the other hand, means that the owner only has the right to use the property for a set period of time. This period is usually defined in a lease agreement between the property owner (the landlord) and the person who will use the property (the tenant). Leasehold ownership typically applies to apartments, flats, and some commercial properties. At the end of the lease term, the ownership of the property reverts back to the landlord.
A leasehold property is one where the owner holds the property for a fixed period of time, usually between 99 to 999 years. The owner of a leasehold property has the right to occupy and use the property for the duration of the lease period, but does not own the land on which the property is built. The leasehold owner has to pay ground rent to the freehold owner (landlord) for the use of the land on which the property is built. Once the lease period ends, the ownership of the property reverts back to the freehold owner (landlord).
Freehold Property: Freehold property ownership gives the owner the full ownership of both the land and the property on it. The owner of a freehold property has complete control over the property and is free to make any modifications to it without seeking permission from anyone else. The owner also does not have to pay ground rent to anyone as they are the outright owner of the land and the property.
Some key differences between freehold and leasehold property ownership are:
- Ownership: With freehold ownership, you own the property and the land it stands on, while with leasehold ownership, you only own the property for a set period of time.
- Duration: Freehold ownership is indefinite, while leasehold ownership has a specific duration.
- Responsibility: As the owner of a freehold property, you are responsible for the maintenance and upkeep of both the property and the land, while with leasehold ownership, the landlord or freeholder is typically responsible for maintaining the land.
- Restrictions: Leasehold ownership may have restrictions on how you can use the property and may require you to seek permission from the landlord for any changes or alterations to the property, while freehold ownership gives you more freedom to make changes and use the property as you wish.
- Cost: Leasehold ownership often involves paying ground rent to the landlord, as well as other charges such as service charges, while freehold ownership does not typically involve such charges.
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