In the UK there are two main types of tenure to be aware of that can affect your purchase decisions.
Meaning of Tenure in Property
Tenure definition:
Tenure describes the type of ownership you have over a property and its land, as well as the restrictions (or lack thereof) that come with your ownership of the property.
In the UK, the two main types of tenure that we use are either Freehold or Leasehold.
There is also another extremely rare type of tenure called commonhold which is kind of in-between freehold or leasehold.
But it’s so rare that 99.99% of people won’t ever see a commonhold property, at least for now.
There’s literally a handful of developments across the whole of the UK that have commonhold as the type of tenure.
What Does Freehold Mean in Property?
Freehold Property definition:
The meaning of freehold in property is when you buy both the property and the land it sits on, both of which you own outright with no time limit on ownership.
There would be no lease that you have to renew and you won’t have any charges that you need to pay to a landlord.
While you have full control of the property and the land, there can still be restrictive covenants that you may need to be aware of.
What Does Leasehold Mean In Property?
Leasehold definition:
The meaning of leasehold property is a property where you buy the lease from a freeholder to own the property for a fixed term. Your leases are normally long periods of time e.g. 99 years, 125 years, 999 years.
But you never own the land that the property sits on.
Normally you are buying the lease off of another lease holder unless it is a new build.
As the time left on the lease goes down, the less valuable the property becomes and one number that a lot of people try to avoid is 80 years or less.
When you buy a leasehold property you don’t have control over the land that the property sits on.
In general, flats and apartments are leasehold, but there are also houses that come as leaseholds too.
With leasehold properties, you generally have to pay a yearly ground rent (but this is changing because of the Leasehold Reform Act 2022), and you often have to pay service charges if it is a flat or apartment block.
Further Reading
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