Real Estate Ownership in England

When you buy a property in the UK, legal ownership can take 2 different forms. These are called Freehold and Leasehold. In both property ownerships, legal ownership is determined in the England Legal System and this system, which has been in place since the Feudal period, is still valid today.

So What is The Distinction Between Freehold and Leasehold?

Before explaining the distinction between Freehold and Leasehold, we need to define these concepts.

FREEHOLD PROPERTY : Freehold ownership refers to the ownership of the land and the entire structure built on it. For example, let’s consider a land and a consists 3 flat apartment building built on it. Freehold ownership refers to the ownership of both this land and the entire structure on the land.

LEASEHOLD PROPERTY : In leasehold ownership, you own a property for a limited period of time. Mostly an apartment building is divided into flats, and you own the flat with leasehold. If we go through the example above, the land and the entire apartment building with a 3 flat on it belongs to the freehold owner and the flat in this apartment building belongs to the leaseholder with leasehold. The terms and length of the lease depends on the agreement between you and the freeholder.

Freehold Features

Based on absolute ownership.
Both the land and the structure on it are owned.
There is no time limit on ownership. It is owned indefinitely.
Since it is absolute ownership, it is possible to make changes and repairs that you think will be appropriate on your own real estate. Of course, you continue to be obliged to obtain a planning permission from the coincil according to the work to be done.

Leasehold Features

You can own the building on the land for length of your agreement with the landlord. The freeholder is called the Landlord.
You must abide by the terms of the contract between you and the Landlord.
You own the property for a certain period of time. Usually, the Lease is between 21 years and 999 years.
Apart from the premium paid when you buy the leasehold, you pay a one-time annual payment called ground rent. This payment is usually a small symbolic amount, usually between £10-£550.

As a result, the ownership principles of property adopted in the English legal system are manifested as we have explained the general outlines above. Leasehold ownership is a property ownership that maintains its popularity in the UK for those who want to buy a house and for investors. It gives the opportunity to own a property for a period of 999 years and can be purchased at more affordable prices with leasehold compared to freehold ownership in the purchase of property, reduces the investment cost and gives the opportunity to benefit from the property in the maximum possible way.

Furthermore, it could even gives the opportunity to rent the house and resell the remaining years of lease.