Estate / North America
Track North American real estate trends, housing market shifts, commercial property and regional investment dynamics.
STAY AWAY - It's Not Really Yours! If You Don't Own The Land You Can't Control These Crucial Things
Summary
Houses and apartments present different investment opportunities in the property market. Houses are typically freehold, granting full ownership without additional costs, while apartments are leased, incurring ground rent and service fees.
Investors may find student apartments or hotel room apartments appealing due to guaranteed rent; however, these properties often lack resale value. The net rental yield for apartments is generally lower due to extra fees, and capital growth is limited by a constrained resale market.
Lease restrictions can hinder development flexibility, making it challenging to engage in short-term letting. Reselling apartments can be more difficult, as many buyers prefer houses over apartments.
Despite being easier to maintain and more affordable, apartments typically cost about 30% less than houses. Overall, freehold houses tend to offer better investment returns compared to apartments.
Perspectives
short
Pro Freehold Houses
- Advocates freehold houses for full ownership without additional charges
- Highlights lower net rental yields and limited resale value of apartments
- Emphasizes lease restrictions that hinder flexibility in apartments
- Points out the preference of buyers for houses over apartments
- Notes that houses provide better overall investment returns
Pro Apartments
- Claims apartments can offer guaranteed rent
- Argues that apartments are easier to maintain
Key entities
Timeline highlights
00:00–05:00
Houses are typically freehold, allowing full ownership without additional charges, while apartments are leased and incur ground rent and service fees. Apartments may offer guaranteed rent but often lack resale value and have lower net rental yields compared to houses.
- Houses are typically freehold, meaning you own both the land and the property. This ownership does not incur service charges or ground rent
- Apartments usually come with a lease that often lasts 99 years. This requires payment of ground rent to the freehold owner, along with service charges for maintenance
- While student apartments or hotel room apartments may seem appealing due to guaranteed rent, they often lack resale value. This makes them less attractive for long-term investment
- Net rental yields for apartments tend to be lower because of additional fees. Capital growth is also restricted due to a limited resale market
- Lease restrictions can hinder development flexibility. Objections from freeholders may prevent short-term letting opportunities
- Apartments are generally harder to resell since most buyers prefer houses. However, they are easier to maintain and typically cost about 30% less than houses