Leasehold vs freehold

Question from Miriam updated on 10th April 2019:

I'm interested in finding out more about apartments with a view to investing in one. What is the difference between a leasehold and a freehold apartment? And what are the pros and cons with both?



Our expert Aaron Tunstall responded:

Leasehold is when a property purchaser buys the buildings on a property, but the land itself remains the property of another party. The purchaser is effectively renting the land from the owner. Freehold property is where you own the land and buildings.

The pros of leasehold property is that often it is cheaper and you can own your property earlier without having to pay extra for the freehold land. It can also sometimes be used an an alternative finance option, where you may be able to buy the freehold at a later date.

The cons of leasehold property are that the ground/land rent is often continuously re-assessed. You also receive no benefit from any increase in the value of land. Also, banks will often require higher deposits or it could even be difficult to obtain finance.



Aaron Tunstall is the owner of Impression Real Estate, specializing in sales, building and property management.

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