What is the difference between freehold and leasehold ownership?

In the UK, freehold and leasehold are two distinct types of property ownership

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What is freehold ownership of property?

In England and Wales, freehold ownership of a property is a type of land tenure in which an individual owns the property and land permanently. The owner has full rights to use, occupy and dispose of the property as they wish. Freehold title holders are also responsible for any legal obligations associated with owning the property such as payment of taxes or maintenance costs. Unlike leasehold owners, who only have limited rights to use their properties for certain periods, freeholders have complete control over their properties. This allows them to benefit from any potential capital growth that may occur over time without having to pay rent or obtain permission from another party before making changes to the property. Additionally, when it comes time to sell, freeholders typically have greater control over pricing and can keep all profits from the sale. Ultimately, freehold ownership gives property owners greater autonomy and more security over their investments compared to leaseholds.

What is leasehold ownership of property?

Leasehold ownership of property in England and Wales is a form of landholding where the owner holds rights over a piece of real estate for an agreed upon period. The holder of the lease, known as a lessee, will usually pay rent to the landlord, known as lessor, during that period and have exclusive possession of the leased property. Other rights may also be granted or restricted by the terms of the lease agreement. After the expiry date stipulated in the contract, all ownership rights revert back to the lessor unless further agreements are made between both parties. Leasehold owners often benefit from subsidised services such as landscaping and maintenance provided by landlords on shared communal property like gardens and driveways. However, they do not have the same rights as freehold owners and may be subject to restrictions on alterations, sub-letting or even sale of the property. Leaseholders also typically pay a ground rent to the landlord which is an annual payment for continued use of the property. Overall, leasehold ownership of property in the UK provides tenants with rights and privileges over a given period while still allowing landlords to maintain legal control over their land.