As a freeholder of many properties, I’d like to share a few points that I believe are very important to know. It doesn’t matter if you are looking to buy a freehold or already own one, take a moment to understand the facts.
Freehold vs leasehold
A freehold is the outright ownership of land. If you own a freehold property then you own the property and the land on which it stands. If you own a leasehold property then you own a lease for the property but not the land on which it stands. Owning a freehold sounds like the best option and it usually is, although there are some circumstances where I would not want to be the freeholder.
Rely on expertise
When you consider purchasing a freehold for a number of leased properties you really need to ensure that you understand all of the rights and responsibilities that accompany its ownership. First of all, make sure you employ the services of a qualified solicitor with experience in conveyancing and property. They will check through each lease to look for conflicts and any grey areas which require clarification before you complete the purchase.
Make a point of asking your solicitor about the responsibilities of the landlord. These can include insuring the building, maintenance work, decorating communal areas every so many years, and providing management accounts amongst other things. Ask yourself if you can manage that and if you can afford the upfront costs to manage it.
Be aware of flying freeholds. A flying freehold exists when two freeholds overlap. For example, you could have a cellar, loft space or balcony which extends beyond the boundary of your freehold and over the boundary of the neighbouring freehold. You could also have a first floor premises with a driveway passing underneath giving access to another freeholder. It goes without saying that these circumstances will create more work for your solicitor and therefore, a higher legal bill.
Should you purchase a freehold?
Owning freeholds can be stressful, but I love the business of owning them because I have a good team of people around me to help with the management and maintenance. They are great investments which don’t lose value like a property might in a buyers’ market. Do your own research and carry out plenty of due diligence on yourself, your management, and your circumstances to understand if it is even feasible before you get too carried away.
On the flip side, if you are buying a freehold property that doesn’t come with responsibility to manage other leases then you need not worry. In these circumstances you have complete ownership of the building and the land. Subject to building regulations and planning permission, you may make alterations to the property without seeking permission from any land owner.