Equity Release on a Freehold Flat in 2022

Does a Freehold Property Qualify for Equity Release? Find Out Now!
Contributors: Nicola Date, Katherine Read. Reviewed by Francis Hui
If You’ve Got a Freehold Flat With No Lease, Are Elderly, & In Need of Money, Equity Release Might Be an Option for You. Equity Release Is the Process of Releasing Some or All of Your Home’s Equity to Help Fund Retirement. Read the Full Article to Find If You’re A Good Candidate For Equity Release.

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Many people live in freehold properties and think they have to pay off the mortgage before getting an equity release.

Great news!

This isn’t true. Equity release on a freehold property means you can gain access to funds tied up in your home before you need it to be paid off.

You can use this money to receive a lump sum, or smaller, regular payments.

We will explore this topic more deeply in this article.

What’s a Freehold Flat?

Freehold1 property is a home that the owner has complete control over. This means there are no leases, landlords, or restrictions on how they can use it and who lives in it.

You may have heard of leasehold properties that offer some degree of protection to the homeowner from being evicted by their landlord just because they want to sell, for example.

However, if you own your freehold property outright, then this can’t happen.

Freeholders are Subject to Fewer Restrictions than Leaseholders

A freeholder has the right to sell their property at any time. They can also sublet2 or rent out rooms in their home without permission from a landlord3.

The only restriction on this is that they can’t do anything which will change the character of the building.

This means if you want to turn your flat into an office space, this would not be allowed, and you should look into leasehold properties instead.

How Do I Find Out if a Lease is in Place?

There are a few ways to find out if you have a lease4, and these depend on the type of property.

If it’s rented rather than owned, then there will be an agreement in place between yourself and your landlord, which should state whether this is the case or not.

Suppose you own a freehold property, but still rent out rooms to other people. In that case, it may also require some form of permission from your landlords.

Although again, there are limitations here, such as how many additional homes can be added before the building loses its freehold status.

If you’re not sure of the type of property your home is, then it may be worth checking with a solicitor5 who can advise whether there would need to be any restrictions in place based on this information.

Can I Get Equity Release if I Own a Share of the Freehold?

If you only own a share of the freehold, this may mean that it’s impossible to get equity release.

Your landlord would need to agree and sign off on the sale with you for this action to happen.

However, if your landlord is unwilling to sign off on this, other ways can be explored instead.

For example, if your landlord agrees with you, which states they would give up their interest in the property and allow you to sell it back as a freehold when you are ready, then this may open up more opportunities for you.

If your landlord does not agree to do this, then there are a couple of ways you can try and get equity release without their permission:

The first is via the courts, which requires that the judge decides whether or not it should be possible for you to release the property as a freehold.

Based on factors such as how much space they occupy in relation to yours.

However, if your flat was small enough (less than 14 square meters).

This may not be an option since judges would assume that someone living in these conditions cannot afford anything other than a leasehold anyway.

The second way is by buying out another owner’s share to no longer have any rights over what happens with their ownership stake.

This means they can sign off on any agreement for you to release equity from the property as a freehold.

Can I Get Equity Release if There is No Lease in Place?

If there’s no lease in place, you may still get equity release on a freehold property.

This can only happen when the homeowner and landlord have agreed that it should be permitted.

But this depends on what type of property your house is and any restrictions put in place by property title deeds or covenants5 (i.e., whether they are covered).

For example, if your flat were built between 1925-1935, this would mean it has had its share of time under restrictive leases, and these properties will not always qualify for equity release.

A freeholder owns their own home outright and cannot be evicted without permission from themselves; however, they do forfeit some rights if rental income is received.

But, Why Would There Be No Lease in Place?

There are several reasons why there may be no lease6 in place, including:

  • You bought the house outright and, therefore, never signed anything with your landlord.
  • The property is protected by restrictive covenants which state that it can’t have any additional leases inserted.
  • A previous owner agreed to a lease with their landlord, and it expired, but they didn’t insert another one in its place.

It’s worth noting that the last 2 options will require agreement from both landlords, so if your home doesn’t meet these criteria.

Then you may still be able to get equity release on a freehold property by going through other means.

However, this depends on what type of property your house is and any restrictions put in place by deeds or covenants – so make sure to check before taking any further action!

Common Questions

Is There a Maximum Age Limit to Get an Equity Release on a Freehold Flat in the UK?

Is There Any Pre-Payment Penalty?

Can You Get Equity Release on a Freehold Property With an Outstanding Mortgage?

What's the Difference Between a Leasehold and a Freehold Flat?

Can I Release Equity From a Flat That Is Not My Principal Home?

In Conclusion

When you own a freehold property, you can usually release equity in the form of a cash lump sum.

However, there are some restrictions with this type of transaction that may not apply to leasehold properties.

You should always consult an experienced financial adviser or solicitor before taking any steps towards releasing your home equity if it’s a leasehold property. 

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Editorial Note: This content has been independently collected by the SovereignBoss advisor team and is offered on a non-advised basis. Sovereignboss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

rachel w

Rachel Wait
Personal Finance Journalist

Rachel is an experienced finance journalist and editor with a particular interest in personal finance and consumer affairs. She has vast experience writing about money issues, property, insurance, and consumer affairs, and you’ll find her articles regularly featured in top media and newspaper publications.
John Lawson

Written by
John Lawson
Founder SovereignBoss

John is passionate about education and has made it his life-long mission to assist UK citizens on their future financial options, with a specialist interest in equity release, and SovereignBoss is the natural extension of this passion.
francis

Reviewed by
Francis Hui
Senior Risk Manager

Having held various high-level roles across the industry, Francis is truly an expert in aiding UK citizens in their financial decisions and risk analysis. His unique insight and statistical knowledge make him the perfect person to help you take your financial future to the next level.
kath icon

Katherine Read
Consumer Affairs Writer

Since joining the editorial team at SovereignBoss, Katherine has become focused on bringing transparency to finances and opportunities for those approaching retirement age. She writes on the topics of equity release, home reversion, and mortgages.
nicola

Nicola Date
Writer & Journalist

Nicola is a financial writer for SovereignBoss and is passionate about the opportunities that equity release can open up for homeowners. Her extensive business experience and deep understanding of the industry means that she’s always up-to-date with the latest developments.

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