Are you looking to buy your first home? Or looking for an investment property? You may have come across the terms Freehold and Leasehold then. If you haven't- don't worry! They are not complicated to understand but are something you should definitely look into before you make an offer, so you can make the best decision for yourself!
Freehold – this is when you own the property and the land it's built on for as long as you want.
Leasehold – this is when you own the property for a certain period of time, but not the land it's built on. You can extended the lease or try to buy the freehold, if it is possible. You also need to consider the extra charges.
Don't forget to ask the important questions when viewing a leasehold property! You want to have all the facts before you fall in love with a home and make an offer. Have a look below for some of the questions we think you should ask!
- What is the length of the lease? You might struggle to get a mortgage on a leasehold property if the lease is near its end. Even if you do, you might face difficulties selling it in the future. Talk to a mortgage advisor before you make an offer and commit to a purchase. If you don't have one, we can help you! Email enquiries@janforsterestates.com or call 0191 236 1079.
- What exactly will I own as the leaseholder? Buying a property is a big and expensive commitment. Before making an offer, you need to know exactly what you are buying to avoid any disappointment in the future.
- Are there any ‘administration charges’? This is a charge you pay directly to the freeholder when a service is provided directly in relation to your individual property. This is not covered by your service charge.
- How much is the ground rent? This is a regular payment to the freeholder that you’ll need to make to 'lease' the land your property sits on.
- How much is the service charge? You need to know how much extra you need to pay every month on top of your mortgage payment and ground rent. The service charge is usually used to to pay for services, repairs, maintenance, improvements, insurance and the cost of management of the building.
- Is the freeholder easily contactable? You need to be able to contact the freeholder if you wish to extend or buy the freehold of the property (if possible), or if you need to repot any problems with the building that need immediate attention.
- Have any alterations been made to the property? Any changes, especially structural, made to the property need to be legal and safe to ensure the well being of you, as the purchaser, and everyone else living in the building.
- Is there any major work scheduled for the building? Building work can take a few months, even up to a year or so to complete. You need to consider this if you think that might spoil your time at the property.
- Are there any restrictions on how I can live in and use the property? Some freeholders might impose certain rules when buying a property on their land, such as not having pets and not being able to run a business from it.
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