Is a Right to Buy Property Leasehold or Freehold?

If you’re looking to buy your council house through the Right to Buy scheme, one of the first questions that might come to mind is whether the property will be leasehold or freehold. It’s an important point to understand before you make any big decisions, as it affects your rights, responsibilities, and long-term costs.

Here’s what you need to know, explained clearly.

Freehold vs Leasehold – What’s the Difference?

Before diving into Right to Buy specifically, let’s clear up the basics.

• Freehold means you own the property and the land it’s built on outright. You’re responsible for everything – the building, the land, and all repairs.
• Leasehold means you own the property for a set number of years (the lease), but not the land it’s on. The freeholder still owns the land and the structure of the building. Leaseholders often pay service charges and ground rent.

So, Is a Right to Buy Property Leasehold or Freehold?

It depends on the type of property you’re buying.

1. Houses (Usually Freehold)

If you’re buying a council house, you’ll usually be offered the freehold. That means once the purchase is complete, you’ll own the house and the land it’s built on. You won’t have a lease or pay ground rent.
That said, not all houses are freehold. In some cases, especially in certain parts of the country, the council might sell the house as leasehold – typically with long leases (often 125 years or more). This can happen if:

• The house is in a block or part of a shared development
• The council chooses to retain some control over the land or shared services
  If you’re not sure, always check the offer document carefully before signing anything.

2. Flats (Almost Always Leasehold)

If you’re buying a council flat or maisonette through Right to Buy, it will almost certainly be leasehold. The council (or housing association) will keep the freehold and grant you a lease – usually for 125 years.

As a leaseholder, you’ll have to pay:

• Service charges – for maintenance of shared areas, repairs, cleaning, lighting, etc.
• Ground rent – though this is often nominal
• Major works costs – these can be large if the building needs a new roof, lift repairs, or external cladding

Some leaseholders are surprised by the scale of these charges, so it’s vital to ask for a breakdown before you buy. You have a right to see past service charge statements and estimates for future works.

Why the Distinction Matters

The difference between freehold and leasehold has several important implications for Right to Buy purchasers:

Financial Considerations

• Leasehold properties come with ongoing costs that freehold properties don’t have. You’ll need to budget for:
• Ground rent (though many councils charge minimal amounts)
• Service charges for building maintenance and communal areas
• Potential major works contributions (for things like roof repairs or lift replacements)
• Buildings insurance (often arranged through the freeholder)

Future Sale Considerations

Leasehold properties can be harder to sell, especially if the lease has fewer than 80 years remaining. Mortgage lenders become increasingly reluctant to lend on shorter leases, which can limit your pool of potential buyers. You might need to extend the lease before selling, which can cost thousands of pounds.

Property Modifications

As a freeholder, you have much more freedom to modify your property (subject to planning permission). Leaseholders often need permission from the freeholder for significant changes, and some modifications might be prohibited entirely under the lease term.

Can Leaseholders Ever Buy the Freehold?

If you’re in a leasehold flat, you generally can’t buy the freehold on your own. However, if the majority of leaseholders in the block agree, you might be able to collectively buy the freehold – a process called enfranchisement.

For leasehold houses, the law often gives you the right to buy the freehold later, once you’ve owned the property for a few years.

Things to Watch Out For

• Short leases: If the lease has less than 80 years left, mortgage lenders may be reluctant. Always check the lease length.
• High service charges: These can catch you off guard, especially with older blocks.
• Major works bills: Councils can charge leaseholders thousands for major improvements, like roof replacements or external insulation.

Always get legal advice and, ideally, a surveyor’s report to understand what you’re buying into.

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