Are freehold properties easier to sell than leasehold?
When looking to purchase a property, there are two distinct ways in which the property may be held. This can have a direct influence on what exactly is being purchased, the process of purchasing and, crucially, the cost both during the transaction and potentially into the future.
What is the difference between freehold and leasehold?
When freehold is purchased, the buyer purchases the entire property, including the land upon which it is sitting. The owner will hold the property entirely and there is no limit on the ownership allowing the property to be passed down the generations or sold onwards. The owner is responsible for all maintenance and repairs. It is not always the case, but typically, properties such as houses or bungalows are held as freehold while flats are more often held as leasehold.
In contrast, leasehold ownership only grants the owner the use of the land for a certain period of time. Leases vary in duration, with those of a certain length being registered at the Land Registry while shorter leases are not registered.
Leasehold properties will potentially have restrictions associated with them, including the need for there to be maintenance responsibilities and restrictions on sub-letting. This will often deal with matters such as looking after the common area in the case of a block of flats.
Whilst there are likely to be benefits associated with the leasehold, particularly where there are notable common areas that will need managing, this does add a layer of complexity in the conveyancing process. There also needs to be consideration concerning what would happen if there should be a desire to purchase the freehold or extend the lease at some point in the future.
Costs associated with freehold and leasehold transfers
Transparency is crucial and a reputable conveyancing solicitor or conveyancing firm such as https://www.samconveyancing.co.uk/conveyancing-quote will provide both leasehold and freehold conveyancing quotes when requested at the outset.
There is more documentation when it comes to the leasehold position as it would be necessary for a new leaseholder to fully understand their obligations, particularly when it comes to the regular service charges that they are likely to have to pay.
The immediate expense of leasehold conveyancing is usually greater, but there are also additional future expenditures associated with leasehold properties which need to be considered. There are likely to be costs involved in extending the lease or purchasing the freehold at some point in the future which need to be taken into account. In addition, there may be less of a market demand for leasehold property and therefore the value may be less and is likely to decrease as the length of the lease reduces.
