Leasehold Home
There are many different ways that people can own land, and one of the most common ways is by leasing it to someone else. In fact, leasehold land isn’t a new concept; it dates back to the Norman conquest, when the landed gentry leased large swathes of country estate to those who wanted to farm or live on them.
The resulting arrangement made sense for both the landowners and the tenants. The lord could be assured of an income stream from the land, while the tenant could build a home on it or use it for other purposes as long as they paid the owner of the land a monthly fee.
Today, there are many reasons why people choose to lease land for their homes, from affordability to convenience. However, the downside of leasing land is that you might not build as much equity on your property as you would with a freehold.
Buying a Leasehold Home
Aside from this, you may also lose your equity when the lease expires. This can make reselling your home much more difficult, especially if you have a surrender clause in your lease contract.
While real estate listings don’t always mention leased-land properties, it is important to investigate this aspect of your prospective purchase. If you’re not sure whether a property is leased or not, ask the seller or agent about it.
You might want to ask how much the monthly fees will be, and how long they’ll last. This is a critical part of deciding whether a leasehold home is right for you.
In addition, you should also ask about any potential escalating costs that might occur over time. If the monthly fee increases by a significant amount, this could put your payments out of reach for people on fixed incomes, or it could even eat away at any rental gain you might have made over the years.
There are many differences between owning a freehold and a leasehold, but the most obvious difference is that with a freehold you have full ownership over the land. With a leasehold, you must pay a monthly fee to the landowner until your lease ends.
Another big difference is that with a freehold, you can sell your home to another person, without having to get permission from the landowner. With a leasehold, you can only sell to a third party who also owns the land.
If you’re interested in buying a freehold home, talk to a mortgage broker who specializes in this type of property and can help you navigate the details of the process. They can explain the pros and cons of freehold versus leasehold property, so you can decide which is right for you.
The main drawback of owning a freehold is that it usually costs more than a leasehold property. This is because it takes more work and time to buy a property with a freehold.
Moreover, the resale value of a property with a freehold is likely to be higher than that of a property with a leasehold. The reason for this is that with a freehold, you own both the house and the land.