Freehold | Rental Property Terminology | Vesta Property Glossary

A guide to freehold

Owning freehold gives you the ability to own both a property and the land upon which it is situated. How does this differ from leasehold? And how does the selling work?

What does freehold mean?

Freehold is the outright ownership of a property, including the land the property is situated on and any permanent structures on it. For property or land to be freehold, there are two criteria it must meet:

  • The property must be land or connected to land;
  • The time that the property can be owned for must be indeterminate.

Ultimately, freehold is the complete ownership of property and the land on which it is situated, the difference between freehold and leasehold being that you actually own the land, rather than buying a limited lease on a property.

When you own freehold property, you are the sole responsible owner of the building and the land. Repairs, general upkeep and the eventual sale of the property are all entirely up to you. When it comes to selling a freehold, you have complete control of the sale.

The advantages and disadvantages of freehold

Advantages

Freehold properties are usually houses that the owner has full control over, as such they come with a multitude of benefits.

  • Once owned, you won’t have to pay any more money such as ground rents, service charges or admin fees;
  • There is no relationship with another owner, the property belongs to you and you won’t have to take anybody else into consideration;
  • You are free to set your own rules – no restrictions on pets or smoking – and make any amendments to the building you like (as long as you acquire appropriate planning permission);
  • There is no time limit to worry about, you own the property and will be able to keep it in the family for generations if your descendants choose to do so.
Disadvantages

Despite the clear advantages of owning freehold property, it may not be the appropriate choice for every prospective homebuyer.

  • Freehold property is almost always more expensive than leasehold;
  • Flats/apartments are rarely freeholds, if that is the kind of property you’re looking for, freehold may not be for you;
  • If you enjoy communal living, freehold property would likely not suit you.

Some additional terminology

Sharehold

Some flats offer a ‘share of freehold’. This sharehold allows you to own part of the wider building without being restricted by the terms of a leasehold. However, the upkeep of the building will fall to all of the people who make up the wider sharehold, including you.

Flying and creeping

Flying freehold and creeping freehold refers to aspects of a freehold property that encroach onto the land of another freehold property. Flying freehold refers to aspects of a property that reach over another such as overhanging roofs or balconies, while creeping freehold is in reference to aspects that reach under another property like cellars and basements. As your property is making its way onto the land of another, this can cause contention.

Important Note

All information contained in this website is provided as a guideline only, is based on estimates and assumptions, may not be accurate or complete, and is subject to change. We make no representations or warranties with regards to this information, expressed or otherwise. A buyer who relies on such information does so at their own risk. Buyers are advised to seek independent financial advice and should undertake their own due diligence.

Your capital is at risk. Property values may decline and the property might not be able to be rented at amounts sufficient to cover debt interest costs, operating expenses and liabilities, and might not result in a positive cash flow. Property is an illiquid asset and should not be viewed as a short-term investment.

In no event will we be liable for any loss or damage, including without limitation any loss or damage arising directly or indirectly out of or in connection with the use of this website and the information contained therein.

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