Property Types

There are various types of property tenures and we will just look at the main ones.  However we will not cover all the types, but if you do require any further details please contact your mortgage advisor or solicitor.

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Freehold

This is the most sought after tenure.  As this suggests you own the property freehold and there is no superior landlord or leaseholder acting as an overlord.  Although there may be certain easements or covenants contained in the title, as part of the conveyancing process, your conveyancer will undertake the necessary searches and land registry checks.  In some instances you may also need the permission of the lender depending on the extent of your plans.  But apart from that, once good title has been determined, you are pretty much free to do what you like.  Of course you still need to seek planning permission and meet building regulations if you wish to make alternations or extensions to the property, but this is more to ensure you meet local regulations and all work carried out is to a safe standard.  And as you are responsible for the building from exchange, it is important you have at least suitable buildings cover in place at all times.

Houses generally tend to be freehold as you own everything within the marked boundary including the roof/walls.  Some new build houses now tend to be leasehold and we are not fully sure if we agree with that practise.  You pick up the property slightly cheaper, but you are denied the freehold title which we think is a shame.  You can also get freehold flats, but these are not common and you are unlikely to get a mortgage.

Leasehold

This is the other common tenure.  Here you do not own the building or the ground on which it sits.  So you have use of the living space and other areas for a number of years.  Once the number of years run out, the leases expires and the property is returned to the freeholder.  However this is the most common tenure for flats and leases tend to be for many many years!  So it is always key to ensuring you have a suitable lease term.  A lease term of 125yrs is far better than say 85years.  Leasehold properties will be priced with the remaining lease in mind.  As the lease shortens, the cost of extending the lease increases and can easily be in the thousands.  The cost of extending a lease that’s has dropped to below 80yrs remaining will be far more expensive.  So if the lease is shorter than desirable, you can either purchase the flat at a lower cost, have the vendor sell it to you with a lease extension or have the vendor start the lease extension process so that you may implement the extension after completion. The lease may have other restrictive covenants or positive easements confirming your rights. This is a topic best discussed with a professional advisor.

In addition to paying a premium for the lease, you may also be required to pay an annual Service Charge and/or Ground Rent.  Ground rent is effectively what you pay for the ground the premises sit on and can be £0 or a peppercorn £10pa or higher.  Service Charge is the cost of providing any communal services and again can vary from £0pm to several hundred.  What is covered by the service charge can vary.  It can cover the cost of removing bins, mowing grass, utilities, building insurance or very little.  As you do not own the actual building, it is not your responsibility to effect buildings cover.  As the building may contain more than one unit, it is the freeholder’s responsibility to cover the entire building to avoid dispute or other legal obstacles.  You however should insure your contents.

Share of Freehold

This is where say you buy a maisonette and you also get part or all of the freehold of the building.  So you will be the leaseholder as well as the freeholder.  The freehold has little value as the internal units are subject to the lease and no longer under direct control of the freeholder.  But the advantages to you that should you need to do something that requires the permission of the freeholder, you haven’t got far to go!  So you can for example grant yourself a lease extension!

There is always more to it, and so always seek further professional advice in various areas of property purchase.

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