Understanding the cost difference between freehold and leasehold

At Finefair, one of the leading providers of guaranteed rent Islington has to offer, we always work hard to provide the most professional service. With this in mind we ensure we give our clients the best advice and the information they need to make decisions.

One of the biggest questions people ask is; what differences are there in costs between freehold and leasehold properties? We would like to provide some answers here.

Firstly you need to understand what each type of property actually is. A freehold means that you own the building and the land it sits on. Leaseholders on the other hand only own the property or a part of it. The freeholder is therefore technically their landlord. A lease can last for many years but ultimately, unless it continues to be renewed, the building will eventually return to the ownership of whoever possesses the freehold.

With a freehold there are generally fewer costs to be concerned with. If freeholders have leased properties on their land though they need to pay for maintenance of public areas and must have insurance against fire and other damages.

Leaseholders on the other hand could find themselves having to pay annual ground rent, a service charge, maintenance bills, and even a share of the insurance for the property. This all adds up to higher costs. There are even fees if a lease needs to be extended.

If you are investing in a property the first thing you need to do is confirm whether it is a freehold or leasehold. On top of this you should look at what kind of costs you will incur as a result. In addition, with leasehold it is essential you check the length of the lease. The longer it is the better. If it is less than 70 years you may encounter issues with getting a mortgage or selling on in the future.

The Finefair team is here to assist clients looking at investing in properties. We can help with any issues involving freehold and leasehold. Once you make an investment we can offer services to manage and let it. As the most reputable name for guaranteed rent Islington has, we can arrange a service that can offer great security.

If you have any questions please feel free to contact us.