If you're looking to buy a property it's important to be aware of the two different forms of legal ownership- leasehold and freehold. It's a detail which estate agents don't particularly draw your attention to, and can be the difference between deciding whether a home is worth buying or not. If you don't get it right at the outset, it could end up be much more expensive in the long-run.
Leaseholds are normally sold on residences within buildings, such as maisonettes, and basically means that the whole building and land upon which it stands, belongs to someone else; the 'landlord' or 'Freeholder'.
Leases can be as short as 40 years and even run for 999 years, but more commonly they're renewed for around 100 years at a time.
The freeholder is normally responsible for maintaining the common parts of the building such as the entrance hall, staircases, exterior walls, roof, and grounds, with the leaseholders paying service charges and maintenance fees to help cover the cost, on top of the annual 'ground rent' charge.
As a leaseholder you don't technically own the property and as such an major works or changes to the property will need to be approved by the freeholder. It varies by freeholder, but there may also be other restrictions in your terms of agreement, such as owning no pets, or subletting the residence. Penalties for violating the agreements terms can be harsh, and even lead to a lease becoming forfeit, meaning you lose all of your money, with no opportunity to sell the lease on.
Whole houses are normally sold as 'freehold', which means that you own both the building and the land upon which it is built; perpetually. Freehold is the preferred option for any homeowner as it means you don't pay any ground rent or service charges etc. and have more freedom to adapt the building as you wish.
Of course, being a freeholder also comes with responsibilities as you're liable for maintaining the fabric and structure of the building which can be costly if things go wrong, but with good buildings insurance there's little to worry about.
Buying a Leasehold property
If you're looking to buy a leasehold it's important to understand a bit more about how they work. First of all it's safe to say that the shorter the current lease is on the property; the less the property is worth. When a lease term reaches zero years the property reverts to the freeholder, therefore as the lease declines part of the properties value transfers to the freeholder. For example flat A with a 99 year lease is worth 10% more than an identical flat B, with a 60 year lease. In monetary terms, if flat A was worth £200,000, Flat B would be worth £180,000. However the £20,000 difference hasn't completely vanished – it's really been acquired by the freeholder.
Leases of less than 90 years can be troublesome, and certainly anything less than 80 years will significantly reduce the value of the property; even if other property prices in the area are rising. Naturally this will lead to you struggling to attract buyers when you wish to sell, as well as you likely finding it difficult for mortgage providers lending against it.