Any estate free from any hold, aside from the owner, is considered a freehold. Naturally, the owner has absolute rights on any alterations to the property, as long as they respect the local regulations.
The owner of the freehold property also owns the land the property is on, which gives him freedom to use the land and the property as he likes. At the same time, any maintenance costs are the owner’s responsibility.
If you own a freehold property, you do not have to worry about the lease running out, about dealing with the landlord or paying rent, service charges or any other expenses you might have to pay for a leasehold property. If you are planning on buying a freehold, you need to know the freehold properties are usually more expensive than the leaseholds, but the conveyancing process and the paperwork much shorter. You can buy a freehold by yourself, inherit it or buy a share of the freehold. If minimum half of the leaseholders agree to buy a share, you will purchase a share of a freehold and get more control over your home.
In simple words, the difference between freehold and leasehold is related to owning the building (and the land). In freehold, you have the right to occupy a building, but you also own the building, whilst when it comes to leasehold, you have the right to occupy the house, but you do not own the building.
As a leaseholder, you have the right to live in the house just for a certain amount of time, and you might have to pay an annual ground rent, service charges and most of the time you do not have any saying in the maintenance of the building. Whilst in a freehold, you have control over every decision. On the other hand, even if you do not pay rent, there are still costs to be covered by you as a landlord, such as maintenance costs.
Living in a leasehold is not necessary a bad situation, but it depends on the way the landlord manages the building. If you are unhappy with the management of the house or you think your repairing bills are too big, you can challenge the leaseholder by asking a tribunal to intervene or use the Right to Manage, a leaseholders’ right to transfer the management to the Right to Manage company, set up by them. The RTM can help either by removing an incompetent landlord or by giving responsibility to the leaseholders.
Even though the freehold properties tend to be more expensive, in the long term it could be a better option. However, in this housing market, being solvable and able to buy a freehold property, while sustaining a living is a rare alternative.