When buying a property in England and Wales, you are either buying the freehold or a leasehold interest.
Freehold
You own the property and the land it stands on outright. Most houses are sold as freehold. There are no ground rent or service charge obligations to a landlord.
Leasehold
You own the property for the length of the lease, but not the land. The freeholder retains ownership of the land (and sometimes the building structure). Leasehold is common for flats. You may pay ground rent and service charges to the freeholder or management company.
Issues to watch
- Short leases (under 80 years) are problematic for mortgage lenders and reduce property value
- Ground rent and service charges can rise
- Extending a lease has a cost — seek specialist advice
This is general information. Get legal advice from a solicitor experienced in leasehold law before purchasing a leasehold property.