For a lot of people, the difference between leasehold and a freehold property doesn’t seem that far apart.
Well, it is.
Freehold and leasehold properties work on two different levels completely, and understanding the differences can help you with your decision making.
This blog post to help explain the definitions of both a leasehold and freehold property and various tips to get one each. Read on for details!
What is a freehold property?
In basic terms, freehold means that you own the property and the right to live in, provided that you make timely payments to the lender.
If you have the money to own the property, it is almost always the best option to approach the property as a freeholder. You won’t have to pay rent and you don’t have to deal with the landlord or property management company. On the other hand, you will have to maintain the property as you are responsible for it.
Tips to get freehold property
When it comes to freehold properties, there are few tips that can help you obtain one:
- Find a realtor or Calgary condo management company that specializes in freehold properties. They can make the process easier.
- Consider the lease of the property, as the longer the lease, the less time you will have to pay for it.
- Talk to your bank or mortgage broker prior to putting an offer in to see if you qualify based on the leasehold property you are thinking of purchasing.The length of the lease may also affect whether or not you are able to qualify.
- Ensure that the lease is prepaid. If it is not, then make sure that you are able to handle the annual payments that come along with the property.
What is a leasehold property?
A leasehold situation is when you buy the structure or the building, while leasing the land from the owner. The land can be leased from the city, government authorities or private companies and individuals. In layman’s terms, it means you own the property, but not the land it is on.
The freeholder in this case is the landlord, and leaseholder essentially has a contract with the freeholder of the land. Details such as length of the lease, payment of rent, and the legal rights and responsibilities of both parties should be noted down.
However, there are some caveats to consider:
- The leaseholders may face restrictions living in the property
- Any major works that have to be completed must be done after informing the freeholder (the owner of the land) or the Calgary rental property management company.
- The freeholder is also responsible for maintaining the property.
Tips to get leasehold property
When it comes to leasehold properties, there are few tips that can help you obtain one:
- Check the shortest lease your mortgage lender will allow, so that you aren’t stuck in one for the long-term.
- Double check to make sure you can sell your lease if you wish.
- Leasehold allows some people to buy into a neighborhood that they love without paying the same premiums of a freehold.
- Leaseholds provide a housing alternative to people who do not want to be paying expensive rent that can cost as much as mortgages.
New Leaf Properties is a group of dedicated professionals with expertise in managing residential properties for over 25 years. We offer a fresh approach to property management for owners and renters.