Understanding Leasehold Conveyancing vs. Freehold Conveyancing

When it comes to property ownership, understanding the differences between leasehold and freehold conveyancing is crucial. Both have their unique characteristics and knowing these can help you make an informed decision when purchasing a property.

What is leasehold conveyancing?

Leasehold conveyancing involves the transfer of a lease from one party to another. In a leasehold arrangement, you own the property for a set period, as outlined in the lease agreement, but not the land it stands on. The land is owned by a freeholder, and you essentially lease the property from them. This type of ownership is common in flats, apartments and is rarer but not unheard of with some houses.

One of the key aspects of leasehold conveyancing is the lease agreement itself. This document outlines the length of the lease, the ground rent, and any service charges or maintenance fees. New leases are not allowed to contain a requirement for the payment of ground rent, but the vast majority of leases came into existence before this change in the law meaning that ground rent is very much still a live issue

It is essential to review the lease agreement carefully, as it can significantly impact your rights and responsibilities as a leaseholder. Additionally, leasehold properties often come with restrictions on what you can and cannot do with the property, such as making structural changes or the ability to keep pets at the property for example. Where a building is shared it is necessary to divide up responsibilities for the management of the building – for example who is responsible for repairing the roof and who contributes to the cost of that.

The management of the building is often crucial to the transaction. Commonly there will be a managing agent who deals with the practical side of managing a building. Sometimes the building is managed directly by a freeholder and other occasions by the tenants themselves either through what is known as a right to manage company or if they have acquired a share in the freehold.

A common mistake is that people will believe that their flat is freehold because they have acquired a share in the freehold of the building. However, the lease is still the valuable thing that is being sold and the obligations in the lease document itself continue even where the owner of the flat has a share in the freehold interest- and a buyer will be keen to see that the building is well managed and that issues such as buildings insurance and fire risk have been well managed.

What is freehold conveyancing?

In contrast, freehold conveyancing involves the transfer of full ownership of both the property and the land it stands on. As a freeholder, you have complete control over the property and are not subject to the terms of a lease agreement. This type of ownership is more common with houses.

Freehold conveyancing is generally simpler than leasehold conveyancing because there are no lease agreements to consider. However, it’s still essential to conduct thorough checks and searches to ensure there are no legal issues or encumbrances on the property. Freehold properties offer more freedom and flexibility, as you can make changes to the property without needing permission from a freeholder.

Conclusion

Both leasehold and freehold conveyancing have their pros and cons. Leasehold properties can be more affordable and are often found in urban areas, while freehold properties offer more control and fewer restrictions. Understanding these differences can help you choose the right type of property for your needs.

Contact us to ensure your property dealings are handled with the appropriate care and professionalism.

Please contact Philip Cartin on pca@anthonygold.co.uk