If you own the freehold of your home, it implies that you own the structure and the land it rests on. If your residential or commercial property is leasehold, you own the residential or commercial property but not the structure or land and should pay ground rent to the freeholder.
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Freehold vs leasehold: the crucial differences
Do you comprehend what is meant by a freehold or leasehold residential or commercial property? Experienced estate representative, Ian Harris helps explain the key differences.
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What does leasehold mean?
You are purchasing a lease from the freeholder for the right to live in the residential or commercial property for a set number of years. You will not technically own the residential or commercial property outright, the freeholder (or property manager) will continue to own the residential or commercial property and the ground it rests on. Leasehold is prevalent when purchasing a flat or apartment or condo as it sits within a larger building.
The number of leasehold homes has nevertheless grown recently, especially with new builds that are sold straight through the developer.
Recent changes to the law
The Leasehold and Freehold Act 2024 is now law, however specific parts of the Act are being executed one at a time so not everything has been done yet. You can see the development of the modifications here. Eventually there will be a restriction on the sale of new leasehold flats, making Commonhold the brand-new default period instead, where each unit-holder owns the freehold of their home.
Read more about what's changing for leasehold
Main things to understand that have actually been carried out so far are:
- If you own a flat, you can now extend your lease without waiting two years first (as of January 2025).
- This means that more leaseholders in mixed-use buildings can apply for the right to handle