You must have heard a fair share of real estate jargon while dealing with property advisors. The word leasehold is more commonly known to people than its counterpart. However, before buying a house, you must know the difference between a freehold property and a leasehold property.
What is Freehold Property?
When a buyer purchases a freehold property, it means the owner has complete ownership of the property. It means if a person bought a house, then the person owns the house and the land it is built on. And in the case of apartments, the owner becomes a shareholder in the property. Freehold property owners can use it for any purpose as long as it is following the rules and regulations of the local authorities.
Plus, Freehold property can be inherited by the owner’s family. The owner can transfer the property without any restrictions. The advantage of buying a freehold property, the owner gets complete control over the property without any financial obligation such as maintenance fee, ground rents, service charges, or any other kind of charges. The owner spent one time and fixed amount on the property. The owner can do whatsoever with his/her properly if it is in line with the rules and regulations of the local authority. Freehold property is easy to sell because the seller has complete ownership over the property. The disadvantage of buying a freehold property is that it is costly, you need to make a large down payment to secure a unit.
What kind of properties is not freehold?
Apartments, Flats, and homes are not freehold where the land is owned by the developer.
What is Leasehold Property?
In Leasehold property, a person gets a right to property for a certain period. In the case of leasehold property, the buyer is not the owner of the property and the land is built upon. Normally, the lease on the property is given for 99 years. It is possible to extend the lease of a property up to 999 years. However, the lease minimum tenure is 30 years. The advantage of a leasehold property is that it is relatively cheaper than a freehold property. Secondly, the responsibility of maintenance lies with the developer of the project.
There is a risk for homebuyers in a leasehold property. The main disadvantage in the leasehold property is the uncertainty over the land after the lease ends. And It is difficult to take a loan on leasehold property. Banks give home loans on leasehold property only on the remaining period of the lease.
Which properties are preferred more by the buyers, leasehold or freehold?
Homebuyers prefer freehold property over leasehold property because they get complete ownership over the property. They can make changes to it as per the rules and regulations of the local body of authority. Plus it is easier to sell and get a home loan over freehold property.