Freehold and Leasehold

It’s important to know the differences between freehold and leasehold properties when buying property. Most people will be familiar with the terms freehold and leasehold; commonhold and flyimg freehold, however, maybe new to you, so i’m also going to talk a little about that. Essentially, freehold and leasehold are types of estates. Commonhold is a new type of freehold.

Freehold Property

If you purchase a freehold property, you will own the home, the land it is built on, and you will have the right to live there for as long as you please. You can make moderations to the property within restrictions of the law and planning restrictions. You may need permission to make structural changes, particularly with listed buildings (old buildings). Most houses are sold freehold. Flats can be sold freehold, but very rarely, they’re usually leasehold. However, flats are increasingly becoming Freehold because of a legistration that is making it easier for leaseholders to buy the freehold.

Flying Freehold

You may have heard of “flying freehold”, but never really understood the difference between it and a regular freehold. It’s actually just as common as a regular freehold, and is not considered abnormal. However, flying freeholds are a bit of a grey area in the eyes of the law, consequently most lenders will probably not support you financially to buy a property of that type.

A Flying Freehold is the part of the freehold property which overhangs land which does not form part of that property freehold. The flying part doesn’t need to be up in the air, it can be over a part of someone else’s freehold, or over a common part, like a driveway.

Here is an example of how a flying freehold may occur: A semi detached house was seperated 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. Another example where a flying freehold may occur is if an extending balcony is above someone else’s freehold land.

Leasehold Property

If you buy a leasehold property you are actually buying the rights to live in a property for a set period of time. You won’t actually own the property, or the grounds it is situated on. Most flats are leasehold; with the lease, it means you are obligated to pay ground rent to the freeholder. The ground rent will cover the costs for communal maintenance repairs. The lease should stipulate how the service charge is worked out, and how it is divided between the other leaseholders. It’s important to calculate all these costs before committing to a leasehold property, as you may not have budgeted for the additional costs.

Once the set period in the lease expires, the ownership of the property is given back to the land owner. Most leases are roughly 99 years; however, you can get an extension. If anyone is buying a leasehold property, it is important to find out how long the lease is for as it will affect the value of the property.

Why do people get leasehold properties? Well, because most flats are leasehold, and it means everyone living with in the same building has to split maintenance costs in respect of the common parts of the building and the communal areas.

It is possible to extend the leasehold to up to 999 years, and you can actually purchase the freehold, but at a cost.

Commonhold Property

Commonhold is a relatively new idea; it was introduced at the end of 2004. Most properties won’t be commonhold, and those that are were built after September 2004. Again, like leasehold, this type of property is usually found with flats and units.

Most strikingly, commonhold eradicates the concept of a lease and having a landlord. That’s what most appeals to buyers, and why it is favoured over leasehold

Commonhold is pretty self-explanatory. A group of people mutually own, for example, a block of flats. There is no overall landlord. However, there is a freehold owner, and that is a company called a commonhold association. The owner of each flat is a member of the association (i.e if you buy a commonhold flat, you will be part of the association). The commonhold association is responsible for maintaining the communal areas of the building.

The advantages of commonhold are as follows: there is no set period of time to when you have to leave- you are one of the freeholders. All decisions regarding the building are made jointly by the property owners. There will be a standardisation of documentation which is the same throughout all commonhold properties- there will be no input from a dodgy landlord. And what appeals to people the most is that with commonhold, the property won’t lose value, unlike with leasehold properties that lose value as the period of the lease gets closer to its expiry date.

Leaseholders can convert to commonhold, but every leaseholder will have to buy the freehold together, and everyone in the building must agree to convert to commonhold.

Next Article

Types of houses

Related Articles

How Long Does It Take To Buy A House?

What Is Flying Freehold?

Crossover Leases

How To Extend Your Lease

52 Comments - join the conversation...

Showing 3 - 52 comments (out of 52)

jeff2008-12-20 09:52:44 we are leaseholders owning not quite 2/3 of our property. We have a council tennant living in the ground floor. she is barely living there as she stays with a friend most of the time. is there a precedent for approaching the council with a view to purchasing the unit as she is also on benefit, thus committing benefit fraud.
thanks, jeff, Stratford. 3

The Landlord2008-12-21 12:17:35 Hey Jeff,

Are the council the leaseholders of the property? You need to contact the actual leaseholder. She might just be renting the property from a landlord.

If she has to pay rent on the property, she probably isn't commiting fraud.

Do you know more details about her exact situation?

Kind regards 4

chris2009-01-22 18:15:20 We own a freehold flat, one of only two in a detached 1930s house. We have a maintenance covenant but it seems we are the only ones keen to do the work and not get paid for upkeep.Yes the agreement shows it is split. Would we be better off changing to leasehold please, any info would be much appreciated. 5

jeff2009-01-22 18:54:44 Hi re; 21st dec. The council are the freeholder, the council or dss pay her rent as she is not in employment. She stays there about 2-4 days per month and the rest of the time is spent with a friend/boyfriend.
is there any sort of precedent for approaching the council in order to purchase the freehold?

Jeff Stratford 6

Lisa2009-01-23 18:57:16 My partner owns a leasehold flat and I am thinking of starting up my own catering business, using the kitchen in the flat to prepare buffets to be delivered to other locations. Would this type of business be acceptable on a leasehold?
Many thanks 7

Richard2009-02-02 18:30:02 We own a chalet which is on a leasehod arrangement. However, it is a rolling one year lease. The Chalet field has been insitu for around 100 years without any issue. However, the landowner, a company, has decided to start closing down the renewal in favour of building new chalet in the next field... Is there anything that can be done to fight the owner and retain our chalet. (chalets in the field sell for £50k, so a massive investment is to be lost by the 50 or so chalet owners if this goes ahead - council planning are meeting on 4/2/09 anfd the planning officer is supporting the application.)
Hope you can help, thanks 8

san2009-02-14 11:35:32 I and my friend are going to buy a flat in London. Our solicitor recently found out the leaseholder is living/owing the ground floor flat. Our flat is 1st floor with loft conversion, but local council never issued a completion certificate. This is repossession property and the previous owner is a relative of leaseholder. My question is should we go ahead or is there any other issue we should know. Many thanks 9

Ellie Blatchley2009-02-15 15:53:56 I am in the process of buying a flat at the moment. We have been told by our solicitor that we have share of freehold AND a lease which we need to extend as it is only 80 years...
How does that work?

Thanks
Ellie, london 10

derek2009-04-05 20:15:53 i bought my flat just over 5 yrs ago and a friend told me i could buy the leas of my landlord whao can not refuse me is it possible for u to help me out on this question as i am intrested due to my new landlord trying to push this yrs price for the service charge up by almost 78%and i think i am beig ripped off by them 11

peter mancini2009-04-14 11:15:09 14th April 2009
Dear sir/madam

I live +21 others in freehold (Houses & Bungalows) properties on leasehold land.

Can we(all owners, 21),insist legally on purchasing the land our properties are on?

We currently pay the leasehold about £360 each for what is called the (Ground Rent Equivalent)

The small estate was built by Taylor-Woodrow about 1999/2000 for the elderly..on person at least must be 60years old..there is also a limtation on the 2nd person.

I trust you can assist

Yours sincerely
Peter Mancini 12

Jane Ross2009-06-14 21:45:59 Im about to buy a house cash but have just discovered it has a flying freehold. Does anyone know the implications of this why dont lenders like to lend on these properties? will it make it difficult to sell if the buyer needs a mortgage? Thankyou. 13

Adrian Lucas2009-06-29 17:15:12 I own a leasehold property (over 950 years left on the lease) and the leaseholder has offered to sell me the freehold. It's is a semi-detatched house, no maintainance agreement and an annual ground rent of £35. What sort of figure would be expected for such a freehold ? Any ideas apreciated :-} 14

Jools2009-06-30 11:30:34 Nominal sum - £300. Such a long time left on the lease not worth any more. Not going to be any issue for selling.

Jools 15

Ann2009-08-02 17:28:47 We are putting an offer in to a terraced house (Freehold) - unknown to us before the viewing, there is a basement flat (Leasehold). Does anybody know whether the communal area (i.e. front gate) has to be maintained by the Freeholder, using the ground rent?
How about the outside stairs leading to the basement flat? Appreciate if somebody could explain these things - we are first time buyer and would like to avoid possible complication. Thanks! 16

steve2009-08-08 15:20:06 My freehold house has an entryway between myself and my neighbour,with a flying freehold over the top. My house has a bedroom over the rear of the entryway and my neighbour has a bedroom over the front of the entryway. There are gates at the front of the entry,opening onto the street. My neighbour insists that he owns the gates (we have identical rights of way over the entry itself, subject to each paying half for repairs) His deeds do not say that he owns the gates. I think that because he has the room at the front, over the gates, he assumes they are his. Would this be correct? Has anyone else had this experience? 17

Alex2009-08-28 14:26:35 Hi,

My mother lives in a house where the lease has expired. The solicitors who originally dealt with the lease no longer exist, and the person mentioned in the agreement can no longer be found, also she cannot remember ever paying anyone money for ground rent, which is just as well because she has paid all the maintenance fees for the 35+ years. Any advice would be greatly appreciated. 18

Cynthia2009-08-29 09:25:43 We are buying our property through the Social HomeBuy Scheme. We are purchasing 100% which has been approved by our Registered Social Landlord (RSL). We live in a 2 bed mid terraced house.

We have now been informed by our RSL that our purchase will be Leasehold and NOT FREEHOLD. Can they do this? This is not a flat, it is a house! We don't have any ground maintenance or service charges.

Any advice would be appreciated. 19

Martin2009-09-02 12:49:33 Hi
We own a ground floor leasehold flat, which is slightly different from all the other flats in the estate as its one of the two that hasn't got a bay window. Now I decided to change my windows to double glazing but forgot to check with the management company if it was ok to change the design of the windows, as all the other bay windows have got fan lights (quarter openners) on either side of the bay. But as I don't have a bay window don't have any quarter opener, and this has led to poor ventilation in my flat. There's always condensation on the window especially during Winter. Anyway I got my windows changed in that the middle part of it which should be a full fixed glass, now has a top end that opens, and I have been told by the management company that i have to replace it. My lease aggrement does say that if i need to make any structural changes ( which to be honest I didn't think a window was really) i had to inform the directors and as long as it is reasonable they can't turn me down. Please can you advise me on what to do.

Thank you very much 20

Jools2009-09-02 13:41:06 Did you check with the planning consent department/building control as well - probably not given that you did not check with the management company. Need permission to replace windows and you must have a FENSA certificate if you want to sell in the future.

Options are: replace windows or speak with management company and write a long Mea Culpa and see what they say.

Jools 21

R I Horwell2009-10-19 16:56:14 We are thinking of buying the Freehold of our property one of eight flats Six of which are owned privately two being rented by the present Freeholder we have along lease 188 years unlike the other owners who average approx 80 years what are the possible cost that will be incurred through Solicitors and Land Registry ? Would really appreciate Advice Etc 22

geoff2009-12-08 22:38:28 i bought a flat in 2007 with a absent free holder. in oct 2009 i was asked by the new free holder to pay my ground rent, but he has also demanded the ground rent for the two years prior to him taking over the free hold under the principle of "privity of contract" do i have to pay this ? 23

Tanya Wolsey2010-01-04 12:58:00 Hi there, I own the freehold to a house that is split into two flats,the tenant in the above flat is meant to pay me ground rent but has moved out years ago and has since made 2 attempts to rent out the flat. i have a new tenant above us who at first seemed ok but recently started becoming unsavoury, my freehold states that the "demise is not to be used as a means of business, only to be used as a private dwelling" do i have any grounds to have this new tenant removed?

many thanks 24

kelvin2010-01-12 19:21:39 i have bou0ght an house 10 years ago lease is 28 quid a year 70 year left on lease how much would it be to buy the lease thanks 25

Citizenz2010-02-18 12:32:46 I own two houses which have about 790 years left on 999 year leases. The freeholders have disappeared and no ground rent (38p per week) has been paid for years. I certainly have never paid any. My solicitor was unable to trace the freeholders when I purchased the properties. Can I apply after 10 years to become the freeholder? 26

Anda Evans2010-02-18 17:36:18 Tanya Wolsey

If you request CORRECTLY the payment of ground rent but the leaseholder fails to pay it, this could even lead to repossession.

Notice for payment of ground rent

The leaseholder is not liable to pay the ground rent unless the landlord has demanded it. The demand must be in the prescribed form and must specify:

* the amount of the rent due;
* the date on which the leaseholder is liable to pay it, or if the demand is sent after the due date, the date on which it would have been payable under the terms of the lease.

The date specified for payment must not be less than 30 days or more than 60 days after date of service of the Notice, or before it is meant to be paid in accordance with the lease. It may be sent by post to the address of the house or flat to which it relates, unless the leaseholder has previously notified the landlord of an alternative address.

The Notice of Demand must also include:

* the name of the leaseholder to whom the notice is given;
* the period for which the rent demanded relates;
* the name and address of the person or company to whom the payment is to be made;
* the name and address of the landlord (or agent if applicable) by whom the notice is given;
* certain supporting information, provided as notes to the Notice.

The landlord cannot begin any legal steps for recovery of the rent, including action for forfeiture and possession, unless he has previously served the demand in the correct format, given the correct period of notice, and the leaseholder has failed to respond. 27

Citizenz2010-02-22 18:40:55 No ground rent has been requested and I have made enquiries about buying the freeholds. The lack of the whereabouts of the freeholder is preventing my right to buy the freeholds. I am hoping after 10 years to claim the freehold. 28

JURATE2010-03-04 13:55:24 I am a freeholder and my neighbours who are a leesholders and live upsters wanted to extend the flat by doing the room on the loft. Did they need my permission? did they need planning permission? 29

Anders2010-03-17 23:38:41 I have a leasehold flat with 75 years remaining on the leasehold. I pay a yearly ground rent of 50 pounds. I am thinking of buying the freehold or extending the leasehold. However, I have heard that it can be very expensive extending the leasehold, i.e. might even be cheaper to buy the freehold. Any thoughts on how much I should pay for the freehold if I was to buy it, might it be as easy as calculate the ground rent x 20 years e.g. freehold would be valued at 1,000 pounds?

Replies are much appreciated. 30

Jon2010-04-01 15:36:54 I am looking to but a 1st Floor freehold flat. I understand that it is very difficult to obtain a mortgage on a freehold flat, and as a result, very difficult to sell. Is it possible to buy it freehold, then sell the flat leasehold, keeping the freehold for myself? Is this a simple process?
Many thanks. 31

Dgaidge2010-04-02 10:13:30 Hello

I own a leasehold flat and I am renting it. The lease holder of the building is not looking after the building at all and hasn't been for years. No maintenance, no management agency.

The gutters have been filled for years and I have told the landlords that it is causing mould in the flat (which had to be redecorated and will need to be redecorated again now, 2 years later).

I have had some water damage caused by a tenant which I have tried to claim on the building insurance, without any result.

I have contacted the landlord through his solicitor, in vain. I have sent a letter, I have employed a solicitor to communicate with the landlord. Nothing has succeded and I am still owed money and the building is not looked after which is very worrying.

I don't have the money to get a solicitor to pursue it. What are my options?! I heard sometimes the council looks after properties that are not looked after by their leaseholder, and then charge them.... is that the case?

Many thanks for your help.

D 32

Hicks2010-04-25 17:58:21 Hi,
i Have a property which I want to split and sell one of then as lease, do i need to inform my morgage company? Can I keepmy existing morgage? do you have any info that would help me on this.
Many Thanks 33

Madeleine McDonald2010-04-28 19:17:21 I have just put a offer in on a 3 bed house, just received memorandum from Estate agents to find out it is lease hold for 99 years, can anyone give me some advice on this. We love the house and still want it. 34

Melvin2010-05-12 08:40:30 I have been renting my apartment now for 8 years and have just been told by the freeholder that I need to pay £65 to get formal consent. I had getting approval from the Mortgage company on the basis I had to rent as I moved overseas. Do the freeholders always need to give consent ? 35

Steve2010-05-25 11:12:08 I too am having problems selling my flat which is an upstairs flat and freehold, Can I sell it as leasehold and remain the freeholder? It is not a flying freehold and we have a lease with the tenants downstairs. Is it easy to convert to commonhold? 36

sammie822010-07-27 13:16:42 We have a 1900's converted house, into 2 flats, which me and the ground floor owner share the freehold of. The downstairs owner leases his flat and lives away from the area. His new tenants are very unsavory, inconsiderate and a right nuisence. I wonder if I have any rights over the eviction of this tenant? I would like to find out first before I call the other leasholder to make a complaint.

Many Thanks,
Sam 37

Gemma2010-08-09 17:49:49 re: jeff wrote this on 2009-01-22 18:54:44

This is a reply to Jeff who wants to buy the council flat and has tenant who is barely there...

I am in the same position- did you get a reply or find anyhing out? 38

Alison2010-09-15 15:36:52 My husband and I bought a Basement share freehold flat in March 2010, we just had a sharehold meeting and found out the existing fire escape stairs had been seriously damage and it need to be replaced with a new one. The total cost of installing a new fire escape stairs is about £40k, the cost will be spilt equally between six of the share freehold owners. Also, we will have to raise fund to repair the roof means we will have to pay £80 extra on top of the monthly management fee. We feel like we have walked into a trap and feel unfair of not knowing the fact for this high maintence cost for the building before we bought the flat. We don't even use the fire escape , its just too mucy for us to pay. Is there anything we can do to avoid the cost, please could you advice? Thank you! Alison 39

Pat2010-09-30 16:07:28 I live in a block of 55 leasehold apartments which are about 2 years old and have over 100 years left on the lease. The builder is the current freeholder and one of his employees is acting as the managing agent. The builder wants to sell the freehold and some of the residents are considering buying it. If we bought the freehold would we own the building as well as the grounds? Also would you recommend us to do so or is it better to set up an RTM? What would be a reasonable price for the freehold? As you can guess we are learners at this game and would be grateful for any advice that you can provide. 40

Mark2010-12-08 17:19:24 Hi, We own a flat (with a buy to let mortgage) and have 68 years left on the lease. The flat is worth approx £170,000 and rental value is £750 per month - we want to extend the lease but have been told we need to pay £650 for a valuation from the freeholders management ? They wont give me a very approximate idea of how much it will cost to extend the lease or an idea of the calculation so we can get an idea if its affordable - is this right ? The flat is half a house, I wondered if we get together with the flat upstairs do we have a right to buy the freehold. - Many thanks for any advice! 41

jenni2011-01-22 22:13:42 i've paid my mortgage off on a leasehold property, and it now shows on the deed as changed to freehold. But i've just looked on the form and it's on the leasehold list. What does that mean ? Does it mean that I don't own the land and it's still classed as leasehold ? i;m very confused.... 42

Julie2011-02-01 16:31:53 We live in a ground floor Victorian house that has been split into two flats. We have a lease for our property and we have also brought a share of the freehold. Who would be responsible for the maintenance of the roof? Our lease said we are not, but the other owners are saying we are both responsible as we are part freeholders. Can you please help? 43

ujjwal2011-02-02 08:23:49 i want to do the property the freehold what document will required it 44

david2011-03-25 19:48:58 I am in the process of buying a detatched property which was listed as freehold.But to discover it is leasehold,the property has a lease of 950 years left and a ground rent of £17.50 per year.Can anyone tell me the price to buy the freehold. 45

rahul gujral2011-04-26 16:21:17 we live in an independent flat in malviya nagar area in new delhi there are 5 floor in the building and ours is first floor, the whole building is a leasehold property i want to convert my first floor to freehold so that i can sell it easily but i have heard that flat wise freehold cannot be done it will be applied only to the whole building? is it true or what can i do as i dont think my other flat owners in the building will contribute to get the whole building to freehold..please help 46

rasopariso2011-05-01 17:41:18 i want to ask here.
what is the restriction of freehold and leasehold property?
hope anybody can answer it. 47

Elaine2011-05-25 18:41:26 We live in a leasehold flat and our landlord has written to us asking if we are interested in taking over the lease and I assume the property becoming a freehold.

They have offered £15,000 but have stipulated that the agreement means that any arrears on the rent of the property and associated interest would need to be split between the tenants.

Logic would suggest that if we wanted to buy the lease out it would cost us. There are 24 flats so I'm not sure of the £15,000 is split or for each flat.

Any guidance and advice would be greatly appreciated. 48

totaleclipse.2011-07-13 21:17:42 help,I have a ground floor leasehold flat, and the freeholder wants £7,500.00 for mine and upstairs I can not afford both but we are willing to go halves so we can keep it between us, is this a good idea, We have 75yrs left on lease, but im not sure whether to borrow the money or let someone else buy it, i thought freehold properties were easier to sell but reading on line im not so sure now, please advise me. thankyou. 49

Emily2011-07-19 01:56:08 Can you buy a freehold for a nominal fee? I have agreed a purchase of a flat which include the freehold of the entire building. I have been advised that the best course of action is to by the flat on leasehold and the freehold seperately. Can the freehold be sold on a nominal fee or does it have to be linked to marker value? 50

David2011-08-14 02:11:30 We have a leasehold property on the Ground floor. We want to build a basement underneath and extend our flat. Does the freeholder own the land underneath our flat. Can he stop the basement extension, even though the local authority planners have agreed in principal 51

Antonello Romano2011-08-29 15:30:54 Hi,

I live in a block of 53 flats and 52 of us purchased the freehold together. Is there any legal way of obliging the only leaseholder to purchase his share. Collecting the ground rent from just one person is such a problem. Plus we feel like he's taking advantage of us owning the freehold. We can save money by selecting a competitive managing agent and he is taking all the ebnefit without having to pay for his share.

Many thanks,

Antonello 52

Please leave a comment

Click here to cancel reply.

*Name

*Email Address

*Your comment

Notify me via email when someone else leaves a comment