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Leasehold vs. Freehold Property – Which One Should You Choose In South Florida?

RCG News


April 11, 2020

These two terms may seem technical to the uninitiated, but there are few things more important to a landlord or a tenant than whether a property is a freehold or leasehold. It literally makes the difference between owning a property outright and having a landlord to pay rent to.

Here are some main differences that can help you understand which option is feasible for you:

Cost Differences

Freehold properties usually have a higher price point compared to the leasehold variety and it typically applies to apartments in South Florida, which are on the expensive side. However, while it may cost more initially, it will be more cost-efficient than leaseholds, which come with rents, administration fees and service charges.

Additionally, those charges can increase or the property can be sold off to someone who may increase them. Plus, a renewal of the lease for a leasehold also costs extra.

Timing Differences

When you purchase a freehold property, you will own it forever till you decide to sell it off. Leaseholds are more complex in comparison because if the lease is reduced, the value of the property drops with it. If you try and sell a leasehold that has a short lease, you will encounter some issues.

However, you can always apply to have the lease renewed to give yourself more time. This will also increase the resale value of the leasehold. On the other hand, the effort can cost up to 20{6fe69a26c2c06f487892d02889af3b20abb8777b8d8403940cba7c61f59e1d12} of the property value more or less so the process is not simple.

Different Responsibilities

Unlike the owner of a freehold property, a leaseholder has to pay maintenance chances, a yearly service charge as well as rent to the freeholder. If a leaseholder falls behind on rent, the freeholder of the property they are living in can take them to court. Plus, he can also prevent you from selling or re-mortgaging the property before the payments are made in full.

As the landlord, the freeholder is responsible for ensuring that the common areas of the property i.e. the roof, entrance, corridors etc., are maintained regularly. Additionally, the freeholder also has to make sure that the property is insured against natural disasters, fire, etc.

Rich Commercial Group can help you accomplish your goals for property management in South Florida by helping you draft a lease that is in your best interest. Get in touch with us for a consultation today! Our aim is to help our clients negotiate the best terms that can protect their interests and ensure they profit from their properties at the same time. As dedicated real estate property managers in South Florida, we are committed to ensuring you get the best deal possible and have nothing to worry about.