What is Leasehold?
Leasehold means you own the right to use a property for a specific, fixed period, as outlined in a lease agreement. You don’t own the freehold (the land itself), which is typically owned by a freeholder or landlord.
Key Concepts
- Lease Term: The duration of your right to occupy.
- Ground Rent: An annual fee paid to the freeholder.
- Service Charges: Fees for maintenance of common areas.
- Lease Extension: The right to add more years to your lease.
Deep Dive: Lease vs. Freehold
In a freehold arrangement, you own both the property and the land it sits on indefinitely. With leasehold, your ownership is temporary. The leaseholder has rights and responsibilities, as does the freeholder. Understanding the lease document is crucial.
Applications
Leasehold is most common for apartments and flats, but can also apply to houses, especially in new developments or historical properties. It allows for shared ownership of land and communal spaces.
Challenges & Misconceptions
Short leases can significantly impact a property’s value and mortgageability. Misconceptions often surround the extent of the leaseholder’s rights and the freeholder’s obligations. Always verify lease length and terms.
FAQs
- Can I buy the freehold? Often, yes, through a process called enfranchisement.
- What happens when the lease ends? The property reverts to the freeholder.