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There are pros and cons associated with freehold homes, which are properties where you are the outright owner of not only the building in which you live but also the land where it’s located. This guide explains how prospective buyers might view your home, and it also provides details on steps that you can consider that may make getting a speedy and fair offer more likely.
- What type of home is a freehold property?
- Why buyers might prefer to purchase a freehold home
- Possible hurdles to selling a freehold house
- Preparing your freehold property for sale
- Four ways to find a buyer for your freehold home
- Selling a freehold home: frequently asked questions
What type of home is a freehold property?
Of the many millions of houses, flats and other residential properties that exist throughout the UK, some are designated as freehold and others are known as freehold. And understanding the difference between the two is an important part of the process of selling a freehold home.
A freehold property is one where the owner has total legal ownership of the building and, typically, the land on which it was built, as explained by Ideal Homes.
As the owner, this means that your name will be identified on the legal documents related to the house as the freeholder, including with the HM Land Registry, which is a non-ministerial department of the UK government that keeps records of property ownership in England and Wales. HM Land Registry also notes any changes that happen to such ownership.
There are some important differences between a freehold home and a leasehold property. Perhaps the most notable is that freehold ownership is absolute and without time limits, whereas you would only own a leasehold flat or other home for a specific number of years that will be identified in the leasehold agreement that you sign with the freeholder when you first buy that type of property.
Another important difference is that leaseholders must pay various charges to the freeholder, including an annual ground rent and service charges. These funds are used by the freeholder to pay for things like general maintenance and repairs of a building’s common areas.
Why buyers might prefer to purchase a freehold home
As with almost any type of property, there are pluses and minuses when it comes to attempting to find a buyer for a leasehold house. As you’re getting ready to sell your home, it’s worth taking some time to read about the advantages that are often linked with this type of property, as this gives you talking points to share with buyers to hopefully encourage them to make an offer.
Below you will find three of the typical benefits that people looking to buy a home might assign to a freehold property, but there could be other positive aspects about your property – for example if it is located in an area where there is currently high demand for buying homes.
Outright ownership: One of the main attractions of being the freeholder of a house or any other type of residential property is that you are the outright owner of the building and land, and this status of total legal right can provide a certainty and value that leasehold homes do not provide. You could find that some buyers will be interested in your property for this reason alone.
Avoiding fees: Freehold properties do not have the annual ground rent and service charges that are usually part of owning a leasehold flat or other home, and which are used by a freeholder to pay for overall upkeep, repairs and other work in a residential building’s public areas. Homebuyers who have a set budget for purchasing a property might prefer a freehold home because they don’t need to worry about future costs associated with leasehold fees.
No restrictions: Another perk of owning a freehold property is that, due to the total legal ownership of the home and the land, you will not likely have as many restrictions on the use of the property compared to a leasehold home. Lease agreements often include strict terms about what can and cannot be done with a flat or other property, and certain buyers will automatically consider such restrictions to be a dealbreaker, making them prefer freehold properties.
Possible hurdles to selling a freehold house
Whilst there are a number of reasons that could make prospective buyers more interested in your freehold home compared to a leasehold property, there are also some problems that could occur which may create some additional barriers to quickly attracting the interest of a buyer.
Just as it can be helpful to know the advantages that prospective buyers might associate with your freehold home, it is equally important to learn about these drawbacks because it could help you with getting an understanding of why your property is not selling. And some of the issues that are preventing a sale, such as damage to the building, might be solvable.
Higher cost: Freehold properties can be more expensive to own because the burden is entirely on the buyer to handle all of the upkeep of the building and the land, as described on the website Houssed. This compares to a leasehold flat where the owner might only have to pay a manageable service charge to the freeholder, and some buyers may lose interest due to the higher expense.
Structural damage: It’s possible that your house might have some type of significant physical flaw or related problem, which could include dry rot, subsidence, vandalism, storm damage, damp and many other scenarios. Depending on the size of this issue it could be enough to discourage some people from wanting to make an offer. The next section of this guide elaborates on your choice about whether to fix such problems before trying to sell.
Undesirable location: Another key factor that can affect the sale of almost any property is its location. You could find that your freehold home is situated within a neighbourhood that is not considered as desirable as others due to its lack of amenities, poor public transportation links, higher crime rate and more. Because you can’t change your home’s location, you should instead promote its other beneficial aspects to buyers that show an interest in it.
Preparing your freehold property for sale
Freehold homes that look to be kept in great condition will usually be viewed as more valuable to buyers than those which appear to be badly maintained. First impressions count, and that’s why you should take some time to prepare your property when attempting to sell it.
Such work doesn’t have to cost a lot of money or take up much of your time, and inside a house it can be as simple as removing as much clutter as possible from rooms and giving the entire property a clean – and that includes tidying up after any pets that you might have. You should also keep pets locked away during any viewings where interested buyers tour the home.
Outside of your property there are other relatively easy and low-cost or zero-cost tasks that can make the home seem more enticing to buyers. These include removing weeds from, and mowing, your garden, yard or other green space, replacing any roof tiles that might be missing, replacing your front door, giving window ledges a fresh coat of paint and similar steps. This will make your house seem valuable from the first moment that a potential buyer arrives.
Another issue you will need to think about when getting your home ready for sale is whether it has any large-scale structural problems and whether to try fixing them before seeking a buyer.
These issues can include storm damage, subsidence, the presence of asbestos, damp, dry rot and many other types of flaws. If a buyer sees that your property has such a problem then they could completely lose interest, which might delay your ability to secure a genuine offer.
Alternatively, someone could remain interested in your property but they would reduce their offer price by at least the amount of money that they expect it would cost them to correct the problem as the home’s next owner. This in turn would reduce your profit from the eventual sale. Therefore, fixing the flaw before selling is one way that you can prevent that from occurring.
You will have to assess the costs and benefits of launching repair work before selling, as the website Ready Steady Sell notes. Depending on the size of the problem, it could require many months and lots of money to fix, and this could make such work impossible for those owners that lack such resources or the interest in such work, or who want a fast sale.
If this group of owners includes you then there are still ways that you can sell your property, including by getting in touch with a quick buyer like LDN Properties. These companies are renowned for giving owners fast and fair offers to purchase their homes regardless of any structural damage that they might have, or any other problems.
The next section of this guide provides more details on the advantages of selling to a quick home buyer, as well as some other options available for the sale of your property.
Four ways to find a buyer for your freehold home
Once you have gone through all the other preliminary steps to get your property ready for sale, the next step is to choose which approach to use for finding a buyer, whether that’s selling to a quick home buyer, selling through an estate agent, selling at an auction or selling on your own.
There are notable benefits linked to some of these methods, such as being able to finalise the sale of your home within a few short weeks if you get in touch with LDN Properties or another quick buyer. And other selling choices have some distinct drawbacks, like having to pay potentially costly commission when selling with an estate agent or an auctioneer.
You might want to note down your main aims with selling your home, including your goal sale price, how long you can wait before finding a buyer, and whether you are open to paying any fees. Then compare all of these factors against the specific information about all four selling methods below and this should help with identifying the one best suited to your needs.
Selling to a quick home buyer
Quick buyers are companies like LDN Properties that have the money available to immediately purchase your freehold home without having to wait possibly many weeks or even months to first get approval from a lender for a mortgage in order to fund the transaction.
This speeds up the buying timeline significantly to just a few short weeks, and this covers the crucial steps of paying you the full proceeds and exchanging contracts.
Remember also that legitimate quick buyers will never charge sellers any commission, which means that you can count on receiving the total proceeds from the sale. That compares well to selling via an auction or estate agent, as you’ll have to pay fees when selling using either of these methods and that will add to your costs, as the fees are taken out of the sale proceeds.
And if you have a “problem” property with some type of physical damage, legal complications or any other negative issues, you can still get a competitive and fast offer when selling this way, as these companies won’t reduce their offer just because of your property’s age, condition, location, shape, size or type.
By way of example, LDN Properties started in 2003 and since then it has purchased a long and ever-expanding list of homes across the UK that includes, but is not limited to, mews houses, properties with a single skin wall, smoker’s flats, homes that don’t have a landlords certificate, houses of multiple occupancy, properties that have restrictive covenants, flats that have a leak, homes with an absent freeholder, houses with solar panels, properties with council tax arrears, flats with cladding, lock-up garages, plots of land, and flats with a mansard roof, among many other situations.
Selling through an estate agent
Selling at an auction
Another low-effort way to sell your freehold property is through an auction, as the auctioneer will be responsible for creating a listing, advertising it, hosting the auction and then overseeing the final signing of required legal documents in the event that they manage to sell your home.
For doing all of this work, the typical estate agent will charge commission at about 2.5 percent of your home’s auction sale price. This will cause your overall expenses to rise because the commission will be subtracted from the final auction sale proceeds right away. If you are trying to cut costs when selling then you may want to think about using a zero-commission option.
And this is far from the speediest way to sell your property because there is plenty of waiting involved, including several weeks or even months between the day on which you decide to sell at an auction and the day on which the auction takes place. Even if your home does sell, the buyer then has an average of a month to complete their necessary final tasks to complete the purchase, which would extend your overall selling schedule much further.
Selling on your own
Another choice for selling a leasehold house is doing so without any help, which puts the onus on the owner to handle all of the work needed to secure a buyer – everything from producing and advertising a listing to scheduling viewings and hearing offers on the property.
This will take up a lot of your time and energy, along with being quite stressful, and it’s not something that could only be done in your spare time. Therefore, you should only think about pursuing this method if you have previously succeeded with selling a home or if there is a suitably experienced family member or friend that is offering to help with the sale at no fee.
Without such support, it could take more than a full year to find a buyer. And remember that you could get a genuine offer at that late stage but then the person making it could change their mind and rescind it. This would cause the sale to fall apart, adding much more time to the selling schedule because you will have to then start over with trying to find a buyer. And the person that cancelled the offer won’t face any penalties if contracts are not yet exchanged.
Perhaps the only clear advantage of this approach to selling is that you will not need to pay any commission to an estate agent or an auctioneer when your home sells, which reduces your expense. But many people that try this method of selling find that the saving they make on not paying commission is eliminated by other costs, such as advertising their home’s listing.
Top queries and answers about selling a freehold house
Founded in 2003, LDN Properties has bought many freehold homes across the UK. Here you can find our answers to some common queries we get from owners about these properties.
Your top questions when selling a freehold property
Generally, a freehold property is one where you are the outright legal owner not only of the house or other residential building but also the land on which it was constructed. By contrast, a leasehold home is often a flat and you only own the unit for a set number of years as specified in a lease agreement you sign with the freeholder who owns the building that contains your flat.
You may find that potential buyers associate a number of benefits with freehold properties, particularly when compared to a leasehold flat or other type of home. One of the main perks is that the buyer would have total ownership of the building and the land on which it is located, and another advantage is that they won’t have to pay any ground rent or service charges.
There are a handful of reasons that can explain why you might be struggling to get people interested in making an offer on your freehold home. One factor is that the overall cost of maintaining and repairing this type of property can be higher than a freehold home. Another issue could be that the home has some major damage that makes it less valuable to buyers.
There are some simple steps you can take to make your property appear well-maintained and hopefully more attractive to potential buyers. Outside of the home this can include replacing any broken glass or missing roof tiles and mowing and weeding any green space you have. Inside the property this should include cleaning all of the rooms and removing any clutter.
Typically, you will be able to select among selling your freehold property to a quick buyer, selling it via an estate agent, selling it at an auction, or selling it without any assistance. You will discover that each of these strategies has their own pros and cons in terms of whether you would have to pay any commission, how long they would take to complete, and other factors.
If you choose to sell your home to a quick buying company like LDN Properties then you can expect the entire process to only take a handful of weeks, and this includes the exchange of contracts and paying you the sale proceeds. But if you instead sell with an estate agent, an auctioneer or without any help then it will take several months, and possibly longer.
The only instances in which you would need to pay commission when selling your property are selling via an estate agent or selling at an auction, and in both cases the fee will be charged as a percentage of your home’s final sale price and subtracted from the proceeds. You will not have to pay any commission if you sell to a no-fee quick buyer or sell without any help.
