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Topic: House shopping, What's "freehold"?  (Read 772 times)

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House shopping, What's "freehold"?
« on: October 27, 2017, 01:37:55 AM »
Someone was telling me in the UK you don't actually own the property, just the house on it. True? I see the term "freehold", is that what to look for if I want to own the land?
As an American it seems crazy to buy a house, but not own the land. How does that work?

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Re: House shopping, What's "freehold"?
« Reply #1 on: October 27, 2017, 01:55:29 AM »
Someone was telling me in the UK you don't actually own the property, just the house on it. True? I see the term "freehold", is that what to look for if I want to own the land?
As an American it seems crazy to buy a house, but not own the land. How does that work?

Freehold estate means the owner owns both the buildings and the land that they are on, forever.  This is what you want.

The antonym to "freehold" is "leasehold".  A leasehold is where you buy a right to live on a property for specified period of time (typically a very long time), but at some point in the future, the property will revert back to the owner and you (or your descendants) will have no right to remain.  In addition to the mortgage you pay on the leasehold purchase, you would also typically be asked to pay "ground rent".  Leasehold used to be fairly uncommon in the UK, but they were starting to fall out of favor a few years ago.  However, I have seen recent articles suggesting an increase in the number of new-build houses being sold as leasehold now.

http://www.bbc.co.uk/news/business-40711013

If you are looking to buy a property, be sure you know what kind of estate you are buying.  You do not want to get caught out in the future.
« Last Edit: October 27, 2017, 02:19:55 AM by jfkimberly »
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Re: House shopping, What's "freehold"?
« Reply #2 on: October 27, 2017, 08:58:57 AM »
This is definitely an issue to be aware of if you're buying a house:
The new-builds catching house buyers in a leasehold property trap
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Re: House shopping, What's "freehold"?
« Reply #3 on: October 27, 2017, 11:08:59 AM »
It's even stranger when you find out that the person who actually owns the land is the Earl of Sussex or something like that. 

Are you actually going to try to buy a house before you get here?  That sounds difficult.  We could barely pull off buying a house while actually here, couldn't imagine trying it while in the states.  I'd guess you'd have trouble finding someone who will actually sell to you as sellers want buyers who won't back out and someone in the states has a risk of that.


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Re: House shopping, What's "freehold"?
« Reply #4 on: October 27, 2017, 11:40:49 AM »
Yes, you want the freehold.  In some cases there is a chance to buy the freehold at purchase or have it be leasehold and buy it later.  Definitely buy it along with the house, or refuse to buy the house.  There are tons of stories of people trying to buy their freehold and the price has gone from like £600 to £60k in a few years. 

If you are buying a flat, a lot are leasehold, but some are share of freehold.  You still have to pay a service charge (our old landlord paid £800 every six months) but he also had a 1/5 say (there were 5 flats) in what the service charge went to, such as repairing the roof or repainting the building.
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Re: House shopping, What's "freehold"?
« Reply #5 on: October 27, 2017, 11:49:19 AM »
I disagree that you want freehold necessarily.  You want to know what each means in general and what it means for you in particular.  There are benefits and drawbacks to both types.  What's available also depends on your search area, requirements and price range. 

As a London dweller I don't know a single person with a freehold, most of us live in blocks or conversions as leaseholders.


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Re: House shopping, What's "freehold"?
« Reply #6 on: October 27, 2017, 02:53:11 PM »
Also there is "flying freehold", this is where an upper story part of a freehold house sticks out over some land that you would not own, such as a bedroom above a shared driveway.


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Re: House shopping, What's "freehold"?
« Reply #7 on: November 07, 2017, 02:48:35 AM »
Also there is "flying freehold", this is where an upper story part of a freehold house sticks out over some land that you would not own, such as a bedroom above a shared driveway.
In Chicago the skyscrapers are built over the railroad lines. The railroad owns the land, but sell the air rights to the space above the tracks.
Crazy! We plan on staying & retiring in the house we buy, so I want to own the whole dealio.

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Re: House shopping, What's "freehold"?
« Reply #8 on: November 07, 2017, 10:38:29 AM »
As a general rule of thumb, most houses are freehold and most flats/apartments are leasehold. However, as you will have seen from the above, there is now a trend of also having leasehold houses on estates.

The reasons for this is usually so that the owner of the whole block of flats/estate of houses, has control over the common parts of the estate or building (so the roads or stairwells by example) and can then charge a service charge to the individual leaseholders to look after those common parts. It is possible for these sort of arrangements to also apply to freeholds (by virtue of grant of rights and payment for those rights, but that is not that common).

Leases will also usually have restrictions on what you can do with the property - i.e. alterations, and in some cases decoration. Leases will also usually have some obligations on your landlord to look after certain things for you, i.e. they may for example be responsible for sorting out the boiler when it goes wrong, or repairing damage caused by leaks. If you are buying a leasehold you should check the terms of the lease carefully. You should also check the length of the lease remaining - generally speaking leases with less than 60 years to run cannot be mortgaged, so you would only be able to buy those with equity. As a pp mentioned, some leases have a right in statute to be extended/exchanged for a freehold if certain conditions are met.

As a PP said, both freeholds and leaseholds have their pros and cons; it depends on what you want.

What I will say is that the demise is not the distinguishing factor between the two - it is the length of time the right to the property is granted. A freehold is forever (well, technically until the queen wants it back - but that isn't viewed seriously) and a leasehold is for whatever length of time the lease is granted. Whilst it is more usual that a freehold will include the land as well as any structures on it, it doesn't have to. You could have a freehold of just a house and not the land it's on (though that would be very unusual) and a lease of a house and all the land. You should check or ask your lawyer to check the plans for any property you wish to buy so you can see what is included or not.


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Re: House shopping, What's "freehold"?
« Reply #9 on: November 07, 2017, 01:18:31 PM »
In Chicago the skyscrapers are built over the railroad lines. The railroad owns the land, but sell the air rights to the space above the tracks.
Crazy! We plan on staying & retiring in the house we buy, so I want to own the whole dealio.

Donald Trump bought the air rights above the Tiffany Store on 5th Ave to ensure nobody in the future could build higher and block the view of Central Park from Trump Tower.


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Re: House shopping, What's "freehold"?
« Reply #10 on: November 08, 2017, 12:03:48 AM »
It's even stranger when you find out that the person who actually owns the land is the Earl of Sussex or something like that. 

Are you actually going to try to buy a house before you get here?  That sounds difficult.  We could barely pull off buying a house while actually here, couldn't imagine trying it while in the states.  I'd guess you'd have trouble finding someone who will actually sell to you as sellers want buyers who won't back out and someone in the states has a risk of that.

No, we'll sell our house in San Francisco, get everything we're taking shipped to storage, and probably stay with friends or get a 6 month rental while we shop. We're looking now, but more for research. Don't know the neighborhoods well enough, just looking for what's close to St James Park.


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Re: House shopping, What's "freehold"?
« Reply #11 on: November 08, 2017, 10:35:41 AM »
Leasehold sounds so odd to me.


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