What is freehold land?

Key information
  • Freehold is the complete ownership of a piece of land for residential or commercial use
  • If you own land freehold, you will not be liable for ongoing payments such as ground rents or service charges that come with leasehold land.
  • Freehold land will work out more expensive than leasehold land, particularly in the short term

If you’re considering a land purchase, whether it’s to build your family forever home or to create more space for your growing business, there are a couple of key decisions you’ll need to tackle early on. Not least whether freehold or leasehold land is most likely to meet your needs.

Unsure? Don’t worry, this guide will tell you everything you need to know about freehold land to help you make an informed decision. 

What do we mean by freehold land? 

It may seem obvious, but freehold literally means ‘free from hold’, it is land over which the owner has outright ownership. Legally this ownership lasts ‘in perpetuity’, that is forever, or for ‘an indefinitely long period of time’.

If you own freehold land, you are free to sell it as and when you wish. If you die with the property in your ownership and have not made arrangements to pass it to a named person in your will, it will automatically pass to your spouse or heir.

Occasionally, people believe freehold to mean there is no mortgage or loan outstanding. While this is not the case, there are a number of mortgage lenders who will be pleased to help fund a freehold land purchase.

When you buy a piece of freehold land you will receive the title deed and must register the transaction with HM Land Registry, who have a list detailing the ownership of 87% of the land in the UK as of September 2019. 

Is freehold right for you?

The big benefit of freehold land is that you have complete control over it and are not subject to any ongoing payments such as annual ground rent, service charges or admin fees (which can be the case with leasehold land). You don’t need to worry about your relationship with ‘the owner’. There is no risk of increasing costs or surprises and no time limit to worry about as your lease runs down.

Unlike a leasehold arrangement, freehold is as permanent as you want it to be and allows you to be entirely responsible for your own land.

The main disadvantage of purchasing freehold land is that it often works out more expensive and comes with a significant upfront cost. This might be prohibitively large depending on your situation and the type of land package you are looking to buy.

Where to find freehold land to buy

There are large numbers of freehold sites sitting empty across the UK. But finding the right one and getting it through to sale can be a lengthy and complex process. We suggest starting your search online for the best, most efficient results.

Try a specialist land destination such as Addland, where you can use filters to specifically identify land for sale.

Choosing a freehold plot

Freehold plots of land come in a wide range of shapes and sizes. They might be single dwelling plots that have been separated from a larger estate, or large swathes of arable land with multi-dwelling potential.

Freehold land may be sold with no planning permission, full permissions in place or “outline planning” that will need to be finalised with the local planning authority. You can use the Addland Professional map layers to see historic and current planning applications of all plots of land in England and Wales. 

Building on freehold land

As you own the land outright there will be no restrictions about what you can build, other than those imposed by your local planning authority. 

When it comes to planning permission though, it can be sensible to employ a specialist in planning to help with the legal aspects and negotiations. They can help your plans to have a reasonable chance of approval.

What restrictions might there be?

Local planning rules can be fairly restrictive in some areas, even if you own the piece of land freehold. Planners may dictate that a new building fits with the local building style – using particular materials or complying with height or size restrictions. 

If any woodland on the plot is deemed ancient (wooded pre-1600) planning would almost certainly be denied. And there’s always the risk that a species of endangered wildlife – such as bats – could be found on the land.

All of which can lead to mounting costs before you even begin.

Do your due diligence

When buying land freehold, it is vital you undertake checks to make sure it will be fit to build on (if you wish to build).

Is the land flat enough? What are the building challenges you might face? Is there a risk of flooding or subsidence or pollution? Are there public rights of way running through the plot, or does part of it fall within the boundary of an Area of Outstanding Natural Beauty (AONB)?

Addland Professional can help save you time and effort by giving you a single source of information to support your land research. Our advanced map layers feature these land considerations, and many more, to show specific data points that impact your potential plot. You can get a complete picture of the land you’re considering before you make the purchase.

How much does freehold land cost?

The price of freehold land will vary according to its location, its size, whether full or outline planning permission has been granted and depending on the ease of access and development. Factors such as a beautiful outlook could also impact the price if the land is being sold with residential development in mind.

Of course, the value you place on various aspects may change depending on the reason you are purchasing the land. Purchasing a plot to use as farmland or as a site for industrial buildings, for example, is a very different prospect to a 600-unit housing development or block of flats.

Remember, just as with property, the cost of freehold land will fluctuate with the market demand in the area in which you are searching.

Should I choose leasehold land instead?

If cashflow is an issue, leasehold land may be worth considering. It will allow you to avoid the huge upfront costs associated with land purchase and opt instead to make regular ground rent payments to the freeholder of the land.

As with any large purchase, whether it's a personal or business decision, you need to consider what is best in your situation. You may decide that, in the long run, the freedom afforded by outright ownership outweighs the proposition of a smaller initial investment.

Addland makes it easy to Find, Research, Buy or Sell land. Start your land journey today.

Addland
Published: 27 January 2022
Last updated: 21 February 2022

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