Differences between Leasehold and Freehold
The terms leasehold and freehold are used in connection with properties. They are important terms that present you with certain rights and obligations.
What is Leasehold?
Leasehold entitles you to the right to live and use a certain property but not to the property itself. Since you do not rightfully own the property, a ground rent, which covers the cost of repairs and maintenance needed for the property, has to be paid. Depending on your contract, there may also be additional annual costs from time to time, so make sure that you read the contract properly. Most leases last for 99 years but it can be extended most of the time.
What is Freehold?
Freehold makes you the exclusive owner of both the property you bought and the land it is constructed on. You can do anything you want with it, from simple renovations and repairs to selling it upon your whims. Since you own the whole property, there is no specified amount of time in which you and your descendants could live there. A disadvantage of this, however, is that you have sole responsibility for repairs and maintenance.
In summary:
- Leasehold only entitles you to the right to live and use a property while freehold entitles you to both the property itself and the land it is constructed on
- Most leaseholds last for 99 years while there is no specified amount of time in freeholds
- A disadvantage of freeholds is that you have sole responsibility for repairs and maintenance