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Leasehold vs Freehold

2nd December 2019 by rob

What is a leasehold property vs a freehold property?

Buying a house can be an overwhelming process, with a lot to learn in a short space of time. Even those who have already bought a house may be confused about some of the terminologies, especially when it comes to leasehold and freehold properties. 

This topic is becoming more and more popular, with the recent ground rent scandal in the news affecting leasehold properties. Here, we explain the difference. 

If you own a freehold property, it means you own, and are responsible for the property and the land it is built on. You won’t be paying any ongoing charges, rent, fees etc.

On the other hand, if you own a leasehold property, you only own the property itself. You’ll be paying the freeholder, who owns the land the property is built on, ground rent on an annual basis. 

The leasehold scandal 

You will have purchased your property by agreeing to terms set out in a lease agreement. Leases are often set for long periods of time – sometimes up to 999 years. This isn’t a problem in itself, because historically ground rent fees have been reasonable. However, there are no laws around what percentage of ground rent can be charged, leaving it up to the freeholder to decide, and onerous clauses in some lease agreements state that ground rents could double every 10 years. This, coupled with homeowners who are trapped in leasehold properties when they thought they were freehold, has resulted in a scandal as many as 100,000 homeowners are finding themselves at the centre of. This is especially common if you bought a leasehold property and used a solicitor recommended by the developer.

Unfortunately, if you own a leasehold property you may find moving home difficult because mortgage lenders can be strict when lending on leasehold properties – especially when these clauses exist. 

You can read more about the leasehold scandal in our recent blog article, here. If you fear you’re stuck in the leasehold scandal, or you’re not sure and would like someone to review your agreement for free, contact our leasehold experts – you may be able to claim compensation from your conveyancing solicitors.

LeaseClaims is a working alliance consisting of FS Legal; in partnership with New South Law and Nelsons. We are working collaboratively to secure compensation for the victims of the Leasehold Scandal, who are unable to sell their properties as a result of negligently-sold leasehold contracts.

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FS Legal LLP, registered office, 1 Hagley Court South, The Waterfront, Brierley Hill, West Midlands DY5 1XE (OC366452) is authorised and regulated by the Solicitors Regulation Authority under number 565776.
New South Law Ltd, registered office, Suite 3a, Anchor Springs, Duke Street, Littlehampton, BN17 6BP (10725076) is authorised and regulated by the Solicitors Regulation Authority under number 645781.
Nelsons Solicitors Limited, registered office, Pennine House, 8 Stanford Street, Nottingham NG1 7BQ (07219010) is authorised and regulated by the Solicitors Regulation Authority under number 536939