Freehold vs Leasehold Property in Rochdale & Manchester

As a buyer in Oldham or Rochdale, you’re likely to encounter a mixture of leasehold and freehold homes on the property market. Not so long ago, Greater Manchester was recording the highest proportion of leasehold sales of new houses in the country, according to ONS research.

So, what’s the difference between freehold and leasehold, and is one better than the other? While leasehold properties can tie you to service charges and future negotiations with the leaseholder, they can be considerably more affordable than freehold homes. In short, it’s important to weight up the pros and cons before you sign on the dotted line.

Before you buy a property in Bury, Royton, Milnrow or Littleborough, read out guide to find out more. Here’s what you need to know about freehold v leasehold.

What is the difference between freehold & leasehold property?

When you own a freehold property, you own the property and the ground it was built on, for an unlimited time. With a leasehold property, you are buying ownership of the property for the number of years stated on the lease.

How to find out if a property is freehold or leasehold

You can find out if the property you want to buy is leasehold freehold by searching on HM Land Registry.

Freehold vs. Leasehold: the pros & cons

There are advantages and disadvantages to leasehold versus freehold, so make sure you understand all the implications before buying a property.

Freehold property considered

Buying a freehold property means you own the property and the land it lies on. Most freehold properties are houses, but some flats are sold on a freehold basis too.

Advantages of freehold property

• You can remortgage more easily.
• No ground rent or service charge.
• No need to refer to someone else for maintenance.
• Greater control over renovation works.

Disadvantages of freehold property

• Responsibility for all repairs and maintenance.
• You have to maintain the garden.
• Less affordable to buy.
• You need buildings cover.
• If buying a share of the freehold, building management can be complicated.

Leasehold property considered

Buying a leasehold property grants you ownership of the property for the duration of the lease, usually 99 or 125 years but it could be as long as 999 years.

Advantages of leasehold property

• Usually cheaper to buy.
• You don’t have to pay for buildings insurance.
• The freeholder’s responsibilities include for maintaining the communal areas.
• Freeholders are also responsible for repairs or maintenance to the building’s structure.

Disadvantages of leasehold property

• You will pay ground rent and service charges, though the rules are changing.
• Conveyancing fees are usually higher.
• Leasehold properties can carry restrictions such as not drying washing on balconies or patios.
• You may not be allowed to sublet or own a pet.
• Harder to get a mortgage for leasehold properties with less than 80 years left on the lease.
• Leasehold properties are harder to sell, and may be a key reason why your house is not selling.

Is freehold better than leasehold?

Freehold properties can be favoured for the freedom they offer. While leaseholds can be complex at times, they can be affordable and well-situated – however, you need to look out for hidden charges. Overall, consider your own situation and the particular property you are looking to buy.

Why would anyone buy a leasehold property?

Quite simply, leasehold properties are often more affordable and if you want to buy a flat, most of the homes on the market are leasehold. You can also avoid some costs and commitments such as building and garden maintenance.

How to buy the freehold of a leasehold house

You can buy a freehold house by coming to an agreement with the freeholder. Alternatively, leaseholders have a legal right to serve a formal notice to the freeholder if you meet certain criteria set out in the Leasehold Reform Act 1967, such as holding the lease for 2 years of more. If the property is a flat, you can instead buy a share of the freehold.

How much it costs to convert your lease to freehold depends on the number of years left on the lease. It can be similar to the cost of a 90 year lease extension, but becomes more costly if there’s less than 80 years remaining. Check your lease document to find out.

Changes since the Leasehold and Freehold Reform Act 2024

The Leasehold and Freehold Reform Act 2024 is poised to change leasehold laws. While the changes have not all been enacted yet, they include:

• The right to extend the lease on your flat after less than 2 years.
• Leaseholders can claim Right to Manage is you are dissatisfied with building management.
• Ground rent limited to peppercorn rates for leases granted from 30 June 2022.

If you are planning to buy a property, sell and inherited property, or something else entirely in Tameside, Saddleworth, Bamford or Oldham, then we are here to answer your questions. Contact Cowell Norford to find out more about buying a leasehold or freehold property in Greater Manchester.

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