Am I buying leasehold or freehold?

All homes purchased through shared ownership are leasehold. But, what does leasehold mean? Well, when getting on the property ladder in England or Wales, there are two main types of homes; freehold and leasehold.

In a nutshell, with a freehold, the building and the land it sits on is all yours. However, with a leasehold, you essentially lease the building from the freeholder for a certain amount of time.

Let’s dig a little deeper into the differences between leasehold and freehold: Flats are almost always leasehold, though houses can sometimes be leasehold too.

Buying a leasehold home is essentially a contract between the freeholder (or landlord) and leaseholder. This contract allows you the right to live in a property for a set number of years.

So, if the home you’ve got your heart set on is leasehold – how does leasehold work? It means you would own the property but not the building or land. That means that you’d have to pay rent to the freeholder, as they own the actual building of the property, or the land it sits on.

Most properties in the UK that are privately owned will be freehold. A freehold would be a property where the building and the land it’s on is all owned by you.

In most cases with shared ownership properties, you can go onto buy 100% of the property (but we can double check the lease and confirm this once you’ve found the home of your dreams!). When you hit this milestone of 100% ownership, if the lease allows you to acquire the freehold, the property is no longer a shared ownership home.

It’s worth noting though, that shared ownership flats will usually always remain leasehold and service charges will still need to be paid if you go onto 100% ownership on all property types.

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