If you are considering buying a property in England Wales, it's important to understand the different types of property ownership, including leasehold and freehold. In this guide, we will explain what a leasehold property is and what it means to own a leasehold property.
What is a Leasehold Property?
A leasehold property is a type of property ownership where you own the property for a fixed period of time, but not the land on which it stands. The land is owned by a separate entity, called the freeholder, who grants a lease to the owner of the property for a set period, usually 99 or 125 years.
As a leaseholder, you have the right to occupy the property for the length of the lease. However, you are required to pay ground rent to the freeholder, which is a nominal fee paid annually or bi-annually. In addition, you may also be required to pay service charges for the maintenance and upkeep of the building and communal areas.
Leasehold vs Freehold
The main difference between leasehold and freehold ownership is that with freehold ownership, you own both the property and the land it stands on. With leasehold ownership, you only own the property for a fixed period, and the land it stands on is owned by the freeholder.
If you are unsure about your property ownership, at Land Registry Online, we offer a Title Register service that allows you to easily obtain this information. Simply select the desired documents, complete your details, and you will receive your documents by email within a few hours.
Service Charges and Ground Rent
As a leaseholder, you may be required to pay service charges for the maintenance and upkeep of the building and communal areas. Service charges can vary depending on the size and location of the property, and the level of services provided. It's important to carefully review the terms of the lease before buying a leasehold property to ensure you understand the extent of your obligations.
In addition to service charges, you are required to pay ground rent to the freeholder. Ground rent is a nominal fee paid annually or bi-annually, and is usually fixed for the duration of the lease. However, in recent years, some developers have included onerous ground rent clauses in leases, which can escalate over time and make it difficult for leaseholders to sell their properties.
Lease Extensions and Enfranchisement
If you own a leasehold property, you may be able to extend the lease, provided you have owned the property for at least two years. The process for extending the lease can be complex, and it's recommended that you seek professional advice.
If you own a leasehold flat, you may be able to buy the freehold collectively with the other leaseholders in the building. This process is known as enfranchisement and can be a complex and costly process.
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