A Conversation for Tips on Buying a House

A clueless American asks...

Post 1

Hawenercook

What is a freehold/leasehold?


A clueless American asks...

Post 2

Han McMan

I can answer that. I'm afraid things may be different in the US and someone can fill in the blanks there, but in England and Canada the definition is like this:

Freehold means you get the land that the house is on. There may be some restrictions on the land in the contract, but other than that the land is yours to keep (once you pay off the mortgage).

Leasehold is when you rent the land that your house is on from a land owner. A lot of flats (or apartments) are leasehold. This means that when the apartment building is built the land belongs to somebody else, usually the builder. Holding the leasehold on part of that land is like a long term rental agreement, usually 125 years or so. Each year you pay a small rental fee to the land owner, and when the lease expires a new one is usually negotiated.

Does that explain it?

Han


A clueless American asks...

Post 3

Hawenercook

Thanks Han!
I think I understand the concept now. It sounds rather feudal.

The nearest to that that I've encountered in the US are the ownership associations that are part and parcel with buying into a co-op or condominium building. You buy the flat and it's yours, free and clear, but the building itself and the land that it sits on are owned jointly by everyone in the building. Each unit owner pays a monthly assessment which goes to upkeep of the building's boiler, exterior, and other common elements. Sometimes, each owner is required to pony up a hefty "special" assessment when the building is hit with an especially large bill. I think the same thing may be true of single-family houses that are part of a planned community, but I don't know.


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