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Difference Between Freehold & Leasehold


The terms ‘Freehold’ and ‘Leasehold’ are used in connection with land property, these are two different ways in which properties can be owned. This is one of the first problems people come across when buying a house is understanding the difference between leasehold and freehold. They make take wrong purchasing decisions without taking in consideration the difference between them. These are important legal terms that entitle you to certain rights and obligations and each has its own advantages and disadvantages. Here is a brief explanation of both the types of properties to highlight the differences.


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When you buy a property which is freehold it means that the land on which the property is built is included in the price of the sale and therefore no ground rent or service charge is payable. You become the exclusive owner of the property as well as the land on which it is constructed. It gives full legal rights to the owners to live and use the property. You are the owner of the property until you further sells the property to someone else. No one else can make any claim to the property and you can renovate and repair the property and its boundaries anytime according to your wish. It is this independence that many find so attractive while purchasing a property. Generally people like to purchase residential, commercial or industrial properties which are freehold but in some situations the properties are not being offered for freehold. The only disadvantage of this type of property is that you have the sole responsibility of carrying out repairs that may be required from time to time. Generally freehold properties are better and much more expensive than the leasehold properties as there are fewer complications involved in it. Moreover, the freehold properties give more right and responsibility to the owner.


When you buy a leasehold property, you are actually buying the rights to live and use the property and not the property itself . In other words, It can seem that you are buying a property without really owning it. It does not transfer the ownership to the buyer, It only gives you right to live in the property and someone else still owns the land. You have limited rights on what to do with the property.

Some of the properties have leasehold for life time (normally99 years) which is further extend-able. In such cases the leasehold property has right of lease transfer through inheritance. But will be reverting back to the land owner after the lease expires. Leasehold usually holds an additional annual service charge that the landlord could impose in the contract. The additional charge is for the maintenance fee of the property, which includes the building. So it is prudent to read the document carefully if you are not prepared or not have made a budget for these annual costs.

Difference Between Freehold & Leasehold

  • Freehold confers full rights of ownership of the property and the land on which it sits to the buyer whereas leasehold means a buyer does not become the owner but only gets the right to live in the property
  • Buyer of leasehold property has to bear additional annual repair and maintenance costs whereas freehold property buyer assumes sole responsibility of repairs
  • Freehold property is forever whereas leasehold property is for a set period of time. Normally the lease is for 99 years.

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