I know about "freehold" but what is "leasehold"?

Answer 1

Invariably, if you are purchasing a flat in a modern block, a maisonette or a flat in a converted house, you will purchase a Lease rather than a freehold interest. Furthermore, some houses are sold on a Leasehold rather than a freehold basis.

Many people do not understand the difference between a freehold and Leasehold interest. There are, however, many differences, the most important of which is that if you buy freehold property you and your successors in title have the right to stay on that piece of land forever. When you buy a Leasehold property you only get a right to occupy the property or land for however long the Lease may be. The freehold, behind the Lease, is retained by somebody else (the landlord) to whom an annual
rent is usually payable for the use of the land. The owners of most Leasehold houses have the right by law to buy the freehold and this right now extends to some flat owners.

The reason the flat is usually Leasehold lies in the physical difference between a flat and a house. A flat is usually only part of a larger building which is divided up into other flats that are separately owned. It is therefore essential that the rights and
obligations of each individual flat owner in the building are regulated with particular reference to the liability of individual flat owners concerning the repair and upkeep of the building in which their flat is situated. A satisfactory scheme will therefore involve individual flat owners entering into obligations that constitute a permanent code of regulation for the building. It is essential that the enforcement of these obligations is not affected if the flats change hands and in many cases it is desirable that the covenants should be mutually enforceable by flat owners against each other. To achieve this it is necessary for a Lease to be drawn up since at Common Law such obligations did not pass when the person who entered into the obligation sold his freehold land to someone else.

Finally, if you are purchasing an existing Lease then that Lease will be transferred to you with all its existing rights and obligations. Furthermore it is often extremely difficult to change the terms of the Lease once it has been granted. If you are buying
a new Lease therefore or indeed purchasing an existing Lease you will need to have some understanding of the obligations and liabilities that arise.

Leasehold Guide 2000
Copyright Batchelors 2000

Please go to the link for a further 8 pages of information on leasehold properties.

Answer 2

A leasehold title is for a term of years rather than "forever" like a freehold. It can however be for a very long time eg: 999 years. Leasehold titles are more usual where some control needs to be retained of a building. So for example you could buy the freehold of a large building and convert it into leasehold flats, sell off the leaseholds retaining the freehold. As landlord you would then be able to enforce covenants as to the use of the flats against the tenants, insure the building, perhaps care for common parts of the building like stairs etc. You could have a management company to take care of these aspects, depends on the lease. It is usual that the leaseholder has to pay a ground rent and service charge, the service charge would be used towards such costs as lighting common parts, certain repairs etc.

Answer 3

Leasehold means that you hold the lease to the property, its still your property in the sense that you can buy and sell it, change it etc. But the actual building is held elsewhere.

Most leases are for 99 years, but obviously they run down over the years. If you are looking at a property that has less than about 70 years on the lease, I would suggest that you ask your solicitor to contact the freehold to discuss the possibility of renewing the lease when you purchase.

It doesn't really make much difference in terms of getting you on the property ladder and all that stuff, although freeholds tend to be worth more. However, a lot of flats - especially ones where a house has been converted - will be leasehold, I think this is very prevalent in London.

It didn't stop us buying our flat though, despite being a leasehold - its not in anyway like renting.

Answer 4

leasehold is buying or selling a house which is a lease (i.e) a set amount of time like 99 years. Where as freehold is an out right purchase.

Answer 5

It's where you own the building but someone else has freehold of the land. You pay ground rent to the person who holds the land.

Answer 6

Hi.leasehold is a set number of years when lease runs out you have to re-apply.Personally I would stay clear of leasehold unless its for life.Hope this helps

Answer 7

when you don't own the property outright i.e don't own the freehold in the property e.g. when you rent a property. It can be as long as 99 years.

Answer 8

You own the building but not the land that its on.