Alison Wiles of 1st Associated Independent Chartered Surveyors says:  We often get asked “What’s the difference between Freehold and Leasehold properties?” We say LOTS!  Here are the basics:-

Freehold

You are free to do whatever you want to do with the property within the confines of the law.  The risk with freehold is that you are restricted as to what you can do with the property, for example if it is Listed or in a conservation area. In a conservation area the council would not allow you to change the window style of your property as they need the building to be kept looking the same in the area. With shared freehold in a block of flats/apartments with three residents they can all buy the land and share the freehold.

Flying freehold is not owning the temporary right to a seat in an aeroplane and it is not a killer move in Jiu-Jitsu! A flying freehold is in fact a bit of an anomaly in the United Kingdom. A Flying Freehold is the part of the freehold property which is built above land which does not form part of that property freehold. The flying part need not be in mid-air, it can be over a part of someone else's freehold, or over a common part (e.g. some semi detached houses have a room over a common passageway). The common part need not be enclosed; it can be an external passage.

Here is an example we have found.  An old semi detached house of unusual design was split into two freeholds. However, the dividing line does not go straight down the middle, and one corner of the bathroom is above a part of the lounge next door. Flying freeholds can cause you difficulties when trying to get a mortgage. At worst, a home lender will decide they are not prepared to lend.  You should consult a specialist property solicitor if considering buying this type of property.

Leasehold

You lease the right to use the building for x number of years. X generally means 99 or 125 years. If it’s less than 40 years then we need to know that. Risks that we typically see with leaseholds are, for example, in a block of flats/apartments you will be responsible for rising damp on the ground floor if you own the top flat or apartment. Equally if you own the bottom flat or apartment you will still have liabilities.  A sinking fund is usually put together by the residents on instruction from the landlord to save for any repairs on the building. The landlord can take the residents to court if all people do not comply!  A long lease is common in industrial areas such as mill towns in the North of England. These are for 999 years and are as good as freehold.

For help and advice call Free phone 0800 298 5424 or visit our website at www.1stAssociated.co.uk