When making decisions regarding real estate, it is crucial to know the different types of ownership that exist and which one you hold. One of the most common forms of property ownership is “freehold property.”
This type of land ownership gives you total control regarding rights and decision-making authority over your property, indefinite ownership, flexibility, and more without needing permission from any external authorities. This article defines freehold property, what is freehold ownership, how it works, its benefits and disadvantages, and more.
What is a Freehold Property?
A property over which the owner has complete ownership and rights is a freehold property, meaning they can choose what to do with this property without any restrictions. Owners have full discretion over transferring, selling, or modifying the property without needing external permissions or interventions.
This is also why freehold property is typically more costly than other types of property, like leasehold. Freehold properties can also be transferred to the owner’s descendants without restrictions through the registration of a sale deed. Additionally, their title is free from encumbrances. It is important to note that apartments and flats are usually not freehold since they are built on the same land a developer or builder owns.
What are the Different Types of Freehold Properties?
After understanding what is freehold property, it is also crucial to know the different types. Each type of freehold property comes with its own duties, features, and rights. Knowing the difference means owners can make more informed decisions regarding purchases and transfers of real estate. The main types of freehold property include:
1. Fee Simple Absolute
This level of property ownership gives owners full control over their buildings or land without any restrictions.
2. Fee Simple Defeasible
This type of freehold property has certain conditions an owner must meet. Failure to do so could cause the property to go back to its original owner.
3. Life Estate
Life estates allow individuals to retain ownership over their property for their lifetime. After their passing, it goes to another designated individual.
4. Fee Tail
These freehold properties are passed down to heirs in a specific order. The property owner cannot sell it to anyone else at any point.
5. Joint Tenancy
In this type of property, two or more individuals hold equal rights to the property. Upon the passing of one owner, their shares automatically go to the remaining individuals.
6. Tenancy in Common
In this form of freehold ownership, all owners have different shares of the property. They are allowed to sell or transfer their shares without requiring permission from the other shareholders.
What are the Features of Freehold Property?
When determining what is freehold property, it is important to keep certain features and elements of the title in mind. It gives the title’s owner the highest possible ownership level recognised by the law. Some standout features include:
1. Autonomy
One of the key features of freehold ownership is the total autonomy an owner has over their land or building. Any renovations, modifications, constructions, or even demolitions can be made without limitations. This allows owners to customise their properties without the restrictions typically faced by leaseholders.
2. Permanent ownership
In most cases, one of the most common characteristics of freehold ownership is the fact that it is permanent. Unlike leasehold properties, it does not revert to the original owner after a specified period ends. It can also be inherited, willed to heirs, transferred, or sold, which helps maintain financial stability for multiple generations.
3. Costs
Freehold properties are sought after due to the countless advantages they bring. Because of this, their prices in the real estate market are generally higher than leasehold properties. However, the lack of monthly rent payments and lease renewals can mean that freehold properties are better for financial stability in the long term.
What are some Pros and Cons of Freehold Properties?
Freehold properties come with many advantages, but they also have their drawbacks. These include the following:
1. Advantages
– Depending on local regulations, the owner can do whatever they like with freehold properties. No external permission is required to make any changes to the property or structures.
– There are no time limits on ownership. Once an individual purchases a freehold, ownership becomes permanent. This avoids the risk of expiring leases or the costs of lease renewal.
– In the long term, freehold owners can save money on rent.
– The transfer of ownership is easier to complete with freehold properties than with leasehold properties. They can also be transferred or inherited by heirs.
2. Disadvantages
– The initial cost of freehold properties is typically more expensive than leasehold properties.
– Since the freehold owner is solely responsible for the property, all expenses fall on them. This includes repairs, renovations, reconstruction costs, legal issues, and more.
Wrapping Up
Purchasing a property requires careful research and consideration. While freehold properties come with several advantages, they can be costly. However, they afford owners freedom, permanent ownership, and flexibility.
If you are looking to purchase a new property, consider Tata Capita’s house loans. We offer quick approvals, flexible financing options, an easy application process, and attractive interest rates for housing loans. Download the Tata Capital app or visit the website to learn more!
FAQs
Freehold properties are considered safe since their value increases in the long term. Individuals can also easily get loans approved by financial institutions for freehold properties.
Yes, a freehold property can easily be sold. The owner does not need permission or external interventions. The property can also be transferred or inherited.
The person who purchases the property is the owner of the freehold property and the land it is built on.
Yes, you can take a loan to purchase freehold properties. Tata Capital offers home loans with attractive interest rates, flexible tenures, and more.
18 March 2025
5 mins read
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