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John
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 Posted: Fri Nov 19, 2004 2:59 am Post subject: What's the difference between freehold and leasehold ? |
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| Please exactly what is the difference between leasehold and freehold ? |
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Michael
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| Posted: Fri Nov 19, 2004 2:59 am Post subject: |
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In a freehold - you own the land and the building completely
(though you may own granted leases to other tenants too).
In a leasehold, you own just a right to live in the property for
the duration of the lease, at the end of which you own nothing.
Freeholders can have responsibilities in the deeds if there are other leaseholders. Generally being a freeholder is more desirable but it
can greatly depend. If this is a standalone property then buy the freehold, definitely (if it's just 100 pounds) (IMHO, so seek professional advice). |
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Nick
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| Posted: Fri Nov 19, 2004 3:00 am Post subject: |
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Although I would agree that it is generally better to own a freehold
interest in what Michael calls a "stand alone" property" (which IMHO
includes a semi-detached house) I would suggest that it is far from
clever to own a freehold flat.
It is v. difficult to get mortgages on a freehold flat (because there is usually no easily enforceable right to see to it that the block is insured or repaired or kept wind and water- tight). This makes them hard to buy but generally even harder to sell (and therefore reduces their value. This does not apply to an
arrangement whereby a 'purchaser' gets a lease of his flat together with
a share in a company which owns the freehold of the block (with the
other shares owned by the tenants of the other flats in the block).
This can work v well if properly managed, as it means that the tenants
retain the benefit of having (subject to prevailing market conditions)
easily saleable interests in their homes but (jointly) remain in control
of the service charge, maintenance and management of their block and
thereby avoid having a landlord or his managing agent profiteer at their
expense.
On the other hand, if they cut corners on routine maintenance
they may find that they have been penny wise and pound foolish, having
unnecessarily landed themselves with a vast maintenance bill). |
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| Posted: Mon May 15, 2006 9:11 pm Post subject: |
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| how do you find out how long the lease is for? so if i buy a leased property at the end of the morgage the property does not belong to me? |
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Sarah
Money Manager
Joined: 16 Jul 2004
Posts: 831
Cash Points ££ 12024.38
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| Posted: Mon May 15, 2006 9:48 pm Post subject: |
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| Anonymous wrote: | | how do you find out how long the lease is for? so if i buy a leased property at the end of the morgage the property does not belong to me? |
By contacting the freeholder, you can do this by contacting the land register and do it online for a small fee http://www.landregisteronline.gov.uk/
A mortgage is a loan to buy the lease, you already own the lease on the land.
Say for instance your lease is 75 years, and your mortgage is 25 years, at the end of the 25 years your remaining lease will be 50 years.
Virtually all leaseholders have the right to extend their lease. You may want to do this if there are not many years left on the lease you originally bought. It may increase the value of your home and is usually easier than buying the freehold. The law was changed on 26 July 2002, making it much easier for leaseholders to extend the lease.
Here are a couple of links on extending leases for flats and houses.
http://england.shelter.org.uk/advice/advice-2929.cfm
http://england.shelter.org.uk/advice/advice-2930.cfm |
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housebuyer
Money Saver
Joined: 02 May 2005
Posts: 81
Cash Points ££ 2815.22
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| Posted: Sat May 20, 2006 2:10 am Post subject: |
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There is an option to become a commonhold owner. This allows you to own your flat outright in the same way as a freeholder owns a house now, so there is no landlord to pay.
At the same time you will have a share in the common areas of the building - roof, walls, stairs and hallway - and be partly responsible with the other commonholders for the upkeep of those areas.
Previously, most flats were owned on a leasehold basis. This meant they were held on long leases that run for 99 years. After that their ownership reverts to the landlord of the building the flat is in, who pays no compensation to the tenant.
Leaseholders can also be prey to landlords who may demand exorbitant management fees, charge for building insurance at vastly inflated rates and threaten to evict anyone who refuses to pay up. Landlords can also stop leaseholders selling their flats.
Commonhold: The new system
Under the new rules, upkeep of all the common areas of a building is the responsibility of the commonholders. The idea is that a commonhold association is set up to manage the communal areas of the building. Flat owners who do not want to get involved in the extra work this may involve can appoint a managing agent.
Owning a commonhold could work out cheaper as they will not be prey to the over-charging endemic in the leasehold sector. They will be able to negotiate their own service fees with cleaners, find the best-value buildings insurance and get a better price for building repairs than landlords often do.
The price of a commonhold flat could well be higher than a leasehold one, but any difference is likely to be small. This would come from the fact that leaseholds dwindle over the years and so the nearer they get to the end, the less they are worth. Commonholds are open-ended.
If commonholders fall out over the way their building is run and managed, the Commonhold And Leasehold Act sets up a dispute resolution process for commonhold associations to go through.
The idea is that commonholders do not turn to their lawyers at the first opportunity but have difficulties revolved by arbitration instead. But if things do break down then they could still end up in court. The Act allows for a commonhold ombudsman. |
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Sarah
Money Manager
Joined: 16 Jul 2004
Posts: 831
Cash Points ££ 12024.38
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| Posted: Tue Oct 31, 2006 11:29 pm Post subject: |
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Yes under the newly introduced commonhold the following now apply -
* Each tenant (now called a unit holder) owns the freehold of their own flat (now called a unit)
* No more landlords ! Tenants will be responsible for managing themselves
* As there is no lease there is no expiry date
* All units are covered under a common arrangement, which should help speed things up
An existing lease can be converted into a commonhold but only if 100% of the interested parties agree to it. |
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