Freeholds, leaseholds...Akk?

I know my husband has explained these to me....but I wasn't really listening as I hadn't really wanted to consider the idea of buying a property here.

But we're tossing around numbers, due to the amazing amount of rent we pay....and also the fact we'll be coming back on vacations to the UK annually.....and owning a piece of property in London as an investment might not be as daft as we once thought.

So will someone explain the difference?  I see share of lease hold.....free hold....then numbers of years.  Some high, some low......can you explain?  Pretty please?

My head is so full of costs like management fees we'd have to pay.....upkeep...etc. I can't focus on the small bits!

These are the basics:

If you own a property on freehold you own it outright and you can do what you like with it.

If you own something on leasehold, someone else owns the freehold and you have a "lease" which you own for a fixed period. The lease usually starts off at a lengthy period like 100 years but say the person you're buying off has had it for 40 years then you are buying the remaining 60 years.  At the end of the lease period, the property refers back to the freeholder.  Leaseholds may have restrictions about what you can do to the property.

Are you following me so far?

A share of a leasehold or freehold usually comes about in a situation like a block of flats or a house that has been converted to flats. You and the other owners all own a share. These usually come with various rules about what you can and can't do with the property and shared responsibility for the upkeep of shared hallways etc.

In a nutshell,

        Leasehold - You don't really own the property, you basically are leasing it for a long time ( 99 years, etc.)
        Freehold - The property is yours.

bvamin

got it.  thanks!  (was wondering abotu the free holds=995 years! thing!)

I don't think freeholds are limited to any number of years, even a long time like 995 years.  I think only leaseholds are limited to a number of years.

I don't understand the point of leaseholds, unless the property is cheaper because it is a leasehold.
Fair enough, if a leasehold is for 999 years you probably haven't got anything to worry about, but what if it's
leasehold for 40 years?  You could very well be alive in 40 years time and suddenly you have no ownership
rights in the place anymore.  Even if it were 100 years, you could consider what your children or children's children might due with the property should you want to pass it on to them.  It seems slightly dodgy to me, although maybe I'm blowing it out of proportion?

Matt

Leaseholds with a short time to run on them don't cost  much, or will have an option to renew.  Freeholds with the 999 year thing is because the land is still owned by the Crown, yep, it belongs to the folks in the big house by St James' Park. 

Here's a good link

http://www.whatmortgageonline.co.uk/Homebuyingguide/flat.htm

You should only consider properties with a long(40years+) leasehold.  Also if you're considering a leasehold look VERY carefully at the lease so that you're aware of any hidden costs.  With a lease there will almost certainly be a service charge-which can be hundreds or thousands a year.  There may also be charges on top of that-make sure you know who's reponsible for outside painting, repairs, and most importantly the roof.  Find out when the last time this was done and who paid for it. 

mindy, i'm seeing large service fees!!!!! i was shocked!!!!!

i'm thinking i'd rather freehold anyway. 

I've owned freehold and leasehold and personally cannot see the advantage of leasehold.  Maybe freehold is harder to come by in London, don't know.  But I'd certainly reccomend freehold. 
Plus, with our leasehold we had silly rules like we could only have white curtains and there was no laundry allowed on the balconies. 
If I were you, I'd try to go free hold. 

this is major speculation at this point anyway....DH jsut doesn't seem to worry abotu the fact that 'what if we can't rent it for a few months' and we're in the states and stuck with 2 mortages.  *shudder*

akk, and there is also share of free hold?

Well,

A leasehold is a lease from a third party, generally the company who built the building.

You may them ground rent, which is generally 40 or 50 pounds a year, and service charge, which can be a few hundred a year - you've got no real control over that. If the owner neglects the property or constantly overcharges the service charge, you've got no real recourse

Adding that the the 99 year thing, this isn't a very good deal. So you have the right, if a certain percentage of the leaseholders in the building agree, to buy the freehold. You then, between you, manage all the maintenance, etc. And there is no expiry date.

I guess it's a bit like a housing cooperative.