Whozoo Tips#3
Understanding Property Ownership

Published: 27/10/2023

Understanding property ownership terms is crucial when dealing with commercial properties:

When looking at buying a commercial property it is important that the investor understands the different ownership types. The different types of ownership impact what the investor can and can't do and whether they need permission from someone else to do something. The different ownership structures can also impact the value of the property with Freeholds often more valuable than Leaseholds and Long Leaseholds as the owner of the Freehold tend to have more control.

  1. Freehold: Absolute ownership of the property and land with no time limit. The owner has full control. The freehold will not expire at any point and can be bought, sold or inherited. 
  2. Leasehold: The property is leased for a specific period (e.g., 15 years) to the tenant, who has the right to use it during that time but does not own the land. The tenant (leaseholder) will likely pay a rent to the landlord (Freeholder) for the benefit of having a lease. They may also contribute to service charges or running costs of the property. 
  3. Long Leasehold: Similar to leasehold but for an extended period, often decades or even centuries. Provides more stability to the leaseholder. A long leasehold gives more security than a Leasehold but less than a Freehold. It is common in the UK that Long Leaseholds last 125 years, 250 years or even 999 years.