A leasehold property describes a case where a lessor gives a tenant the right to own a property or land for a limited period of time. However, the lessee does not get the right to own the land on which the property stands. These methods of possessing property are mostly applied for flats, and that is one of the reasons why almost all apartments in London are leasehold.
In order to buy a leasehold property you must make a legal agreement with the landlord in which you must stipulate for how long you are going to live in the building. The agreement must contain the specification that at the end of the lease the property’s ownership will return to the lessor. There are leases that are granted for up to 999 years, but most of the leases on flats and houses are normally shorter.
The contract signed by the tenant and by the landlord must specify the following things:
• the names of both of the parties involved in the process;
• the starting date of the agreement;
• the duration of the agreement;
• the identifying characteristics of the property such as street address or model;
• it must provide the renewal or non-renewal options;
• the responsible for maintaining the property in the same conditions;
• the person who has to repair different parts of the property;
• which are the conditions that the resident must meet;
• the periodic payments for granting the use of the object;
If you decide to opt for a leasehold property, you should know that you can get a mortgage only if there are less than 70 years left on the lease of the building you want to buy, so you need to pay attention to all these details.
Freehold property represents a method to own a building and the land without having a time limit to the period of ownership. So, the difference between this method of owning a property and a leasehold property is the fact that it doesn’t involve an annual ground rent. It also refers to the outright ownership of the building and the land on which it stands.
A freehold property doesn’t involve any restrictions that the owner has to respect. He has full legal rights, and he can use the property and land as he wants. The leasehold hold property just offers the buyer the possibility to live in the building or use it for commercial purpose for a specific duration, meanwhile if you buy a freehold property, you can live there as long as you want.