These are two fundamentally different forms of legal ownership
Freehold is the most extensive ownership and the most common form of house ownership in England. Subject to any restrictions or obligations placed upon the Freehold interest, e.g. a right of way, the freeholder of a property owns it outright, referred to as owning the “title absolute” which includes the land the property is built on
However, in English Law, it’s not possible to own the “Freehold Interest” in an apartment because this would include all the land below & all the air above the property
Leasehold means that the property buyer have a lease from the freeholder (sometimes called the landlord) to use the property for a defined number of years. Leases are usually long term, often 90 years or 120 years and as high as 999 years… but can be short, such as 40 years
These long leases are usually very similar to a “Freehold Interest” in practical terms and a Landlord’s (freeholders) rights to the occupation of the property are very restricted
The lease acts as a contract between the leaseholder and freeholder, which sets out the legal rights and responsibilities on either side. For example, the freeholder will normally be responsible for maintaining the common parts of the building, such as communal areas and the staircase, as well as the external walls and roof. The terms of a lease should define all aspects of the upkeep of a property including obligations to insure, maintain and may include the payment of ground rent by the leaseholder to the freeholder
Be aware that the shorter the remaining term of the lease, the less valuable the property. Therefore the harder it will be to secure a mortgage upon the property if for example a lease has under 50 years to run. However there are various legal rights a leaseholder enjoys by Statute in which they can seek to buy the Freehold or gain a new long lease through a lease extension if so wish
If you have any questions please don’t hesitate to reach out to our residential management team hello@horizonmanagement.co.uk
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