If you are planning on buying property either as an investment or for residential purposes, there are several factors to consider. The price of the property, available social amenities, and transport links are among the topmost considerations. However, there are two terms that confuse many first time buyers: – lease and freehold property. Simply, these two terms are the main ways of owning property. But, before consulting letting agency Leicester have you decided on the type of property you want to buy, whether a lease or freehold property? What is the difference between freehold property and lease property? Which one is the best choice?
Leasehold is generally the most common type of property ownership for many maisonette or flat buyers. With a leasehold property, you are simply buying the right to own property but not the land, for an agreed duration of time. In most cases, leases are long-term tenancies going up to 120 years after which on expiry, the land is reverted back to the owner or the landlord. Although such cases are extremely uncommon, you will need to consider the number of years left on the leasehold, as it can affect the property’s value.
Most buyers will likely go for a leasehold with more than 80 years remaining on the property. This is mainly due to the expensive cost of extending the lease on top of ground rent as well as other annual service charges. While there are some lenders that refuse to lend on a property less than 70 left years on the lease, be sure to consult your local mortgage lender on the minimum number of years they accept on any leasehold property.
Leaseholders may face a number of restrictions depending on the terms of the landowner as spelled out in the lease agreement. With some landowners prohibiting subletting of the property or keeping a pet, other terms include sharing building insurance as well as obtaining permission prior to any major work on the property.
If you are yearning for freedom from a nagging landlord you might consider buying a freehold property. Basically, freehold means you become the sole owner of not only the property but also the land on which the property sits on. You can say goodbye to all those monthly service charges and building insurance costs associated with lease holding. But of course, the freedom comes with a hefty price since you will have to squeeze your purse to buy the land. On second thought, buying land may not be such a bad idea, don’t you think? Well, that’s if you look at it from an investment point of view. You can opt to lease the land or sell it later at a higher price.
When it comes to buying property for residential purposes, purchasing a freehold property is the better option. Who does it love the freedom of staying in his property not being bothered with costs and restrictions no what to not do or do?
On the other hand, if you are seeking to buy property as an investment, buying leaseholds units and renting them can generate high rental yields compared to a freehold property. However, before deciding to rent out your property it is crucial to have a reliable and efficient letting agency Leicester to help you manage the renting and letting processes.