Some homes come with extra things to check before you buy. This article explains how leasehold, commonhold and new-build homes work, and what your lender and solicitor or conveyancer may look at.
This article covers England, Scotland, Wales and Northern Ireland. We’ll tell you where things work differently in Scotland.
The information in this article isn't intended to be advice from ClearScore Technology Limited, its group companies or its affiliates. It's not a substitute for getting advice from a lawyer, financial advisor, or any other professional.
Ways to own a home
There are different ways to own a home:
- Freehold – you own the home and the land it’s on with no time limit.
- Leasehold – you own the home for a set number of years, but not the the whole building or the land it’s built on. This agreement is called a lease. Many flats are leasehold.
- Commonhold – you own your flat outright, and share ownership of the building with the other owners
Some leasehold homes come with a share of the freehold. This means you and other owners jointly own the building and land.
In Scotland, property law is different.
You usually own your home outright, so there’s no leasehold or ground rent. If you buy a flat, you’ll share the cost of looking after shared areas like the roof and stairs. This is often managed by a property factor, who charges a fee.
What gets checked on a leasehold home
Your solicitor or conveyancer and your lender may look at:
- How many years are left on the lease
- Ground rent – a yearly fee you pay to the owner of the land
- Service charges – fees you pay towards looking after the building
- Any big repair works that are planned
- Rules in the lease about what you can and can’t do
- How the building is insured
- The financial situation of the company that manages the building
- Building safety, including any cladding
If the lease is short, or has terms the lender won’t accept, the lender may not give you a mortgage for that home.
Your solicitor or conveyancer will explain how you’d own the home and what you’d be responsible for.
New-build homes
A new-build home is one that’s just been built, or is still being built. Buying one can work a little differently. You may come across:
- A reservation fee – money you pay the builder to hold the home for you
- A deadline to exchange contracts, or to conclude missives in Scotland
- Incentives – extras the builder offers, like money off or paying some of your costs
- A new-home warranty – cover for certain building problems for a set time
- A completion date that’s an estimate, not a fixed date
- A snagging check – a look round the home to find small things the builder needs to fix
Exchanging contracts is when the sale becomes legally binding.
In Scotland, the sale becomes legally binging when solicitors agree to the conditions in writing. This is called concluding missives.
Tell your lender about incentives
If the builder offers you any incentives, tell your lender. Incentives can affect what the lender thinks the home is worth, and its decision on your mortgage.
Keep an eye on your offer end date
Mortgage offers have an end date. If building work is delayed, your offer could end before the home is ready. If this could happen, speak to your lender or broker.
More help
MoneyHelper is a free service backed by the government. It has more information on:
- The money timeline for buying in England, Wales and Northern Ireland
- The money timeline for buying in Scotland
- Buying a home in Northern Ireland, from nidirect
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