Pros And Cons Of Freehold And Leasehold Property

A freehold property is one where the owner has full rights to the land as well as any structure on that land

. A leasehold property, however, gives a tenant right to the building or apartment, while the landlord maintains the right of the land.

Each has its advantages and disadvantages.

Freehold Advantages

*Since you completely own the land forever, you are able to do whatever you'd like with it.

*You're making an investment in property, which could turn out to be very profitable.

*Over the long term, owning a freehold is much more cost effective than leasing.

Freehold Disadvantages

*It is sometimes difficult to secure a mortgage. So if you don't have the money upfront, keep that in mind.

*Even though you have the right to do what you want with the property, you still have to keep in line with local laws and regulations; so you're not completely free.

*You're also responsible for all repairs and upkeep.

*With any investment, it's possible to not get a great return.

*Since you own it forever the only option is to sell it, as opposed to a lease which is usually negotiable and can run out if desired.

Leasehold Advantages

*It's cheaper. A leasehold is always going to cost less initially than a freehold.

*While you're responsible for the internal parts of a building, the landlord is responsible for upkeep of the land as well as many repairs.

*You're still able to make improvements, changes, upgrades, etc. to the inside of the property.

Leasehold Disadvantages

*There can sometimes be unfavorable lease conditions, but these should always be worked out in advance.

*You will never own the property; therefore you don't own the land and can't make any structural changes.

*You have ongoing costs of rent and upkeep fees.

Each arrangement has its advantages and disadvantages, so it's important for you to assess your personal circumstances and see what will work best for you. Take into account flexibility, maintenance, cost, and any other criteria you can think of before making a decision about a freehold or leasehold property.

Do your research regarding a local property and nearby properties to see what works best so you can get the most out of your money.

by: Jacque Crook

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