When you
own the freehold of a property you own all of the property and the land that the
property is on and you will do so until such a time as you sell or transfer the
property. Subject to the usual planning permissions, building regulations and other
restraints, you can make changes to your property as you see fit.
Owning a leasehold property, however, is quite different. You will own the right to occupy the property for a certain period of time known as the term and unless you extend your lease, at the end of this term your right to occupy the property ends. You typically will not own the land under your property, nor the exterior of the building and this will instead be owned by your landlord. You will pay your landlord service charges to maintain the building and provide other services and you may have to pay your landlord ground rent during your ownership ‘to rent’ the land from them that your property occupies.
The lease will contain a number of rules that you will need to adhere to, which include among other things, whether you can have pets, how often you are required to decorate, whether you are allowed to run a business from home and whether you need your landlord’s permission to make changes to the property.
With a freehold property, the owner is responsible for insuring both the building and contents. The landlord of a leasehold property will usually insure the building instead and recover contributions from the leasehold owners who are responsible for insuring their contents separately. The details of the arrangement will also be set out in the Lease.
It is key to remember that every leasehold property is different and so it's especially important to read through the lease of a property you own or are planning to buy, to understand the restrictions you will need to follow, the rights you have and the financial contributions associated with that particular leasehold property.
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