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Difference between Freehold and Leasehold properties
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working woman
Someone in the Credit Deflation thread was asking about Freehold and Leasehold and not wishing to derail that thread, have answered the question here.
The Queen legally owns all the land in Britain. In Britain the Land Act of 1925 allegedly gave British subjects the right to two kinds of ownership. Freehold and Leasehold.
If you have a freehold, you own your property outright for an indefinite period of time (term). By contrast, a leasehold means that you own the property for a specific term of years only. At the end of the term, the property reverts to the freeholder.
Houses are usually freehold. Flats are usually leasehold.
There are some exceptions though, which causes confusion.
Freehold houses - You are responsible for it's upkeep.
Leasehold flats - You pay the landlord, the freeholder annual ground rent and together with your neighbours pay into a savings fund - the Service Charge Fund, to pay for insuring the building and grounds and maintaining it.
Recently some house builders have been building houses and selling them on a leasehold basis. I don't know how this works, but would imagine there is ground rent to pay to a landlord/freeholder and maybe some rules on it's upkeep?
Some developments of flats are freehold - the residents got together and bought the freehold from the original landlord / freeholder. They all collectively pay for the upkeep.
There is also something that is a mix of Freehold and leasehold, that I have come across, such as the house is Freehold, but sits in communal gardens, or an access road, and the residents are collectively responsible for maintaining them.
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