A guide to leasehold

Leasehold is the ownership of a property and its land for a limited amount of time. This is known as its tenure, which is agreed with the property’s freeholder. Leaseholds are usually flats or apartments in a larger building and are usually very long term lets of decades or even centuries. So, what is leasehold property?

• A leaseholder has a contract with a freeholder;
• The freeholder will be responsible for the general upkeep of the wider property, covering issues affecting the entrance and roof of the property;
• The leaseholder will likely have to pay maintenance fees, service charges and annual ground rent.

As a leaseholder, you will own the rights to a portion of a property, but it won’t be wholly yours. There are many restrictions to owning property in this fashion and, along with the additional fees you’ll have to pay, you’ll have to be aware of how the landlord will allow you to act in the property.

Advantages:

While most people view owning freehold property as more advantageous than owning leasehold, it doesn’t mean that leasehold is not without its merits.

• First and foremost, leasehold properties often have a much lower buying cost than freehold;
• As the owner of a leasehold property, much of the external maintenance will be taken care of by the landlord. You will have to pay maintenance fees, but these often pale in comparison to some of the costs that can be faced by freeholders.
• If you are interested in communal living and want a property with a concierge service, gym, pool and large common areas, you’re almost certain to be looking for a leasehold property.

Disadvantages:

Despite the cheaper costs of many leaseholds, it is important to remember that these are only initial and that leasehold properties can come with a multitude of disadvantages.

• You may be restricted with what you are able to do to your property. From structural changes to restrictions on pets or smoking, your landlord is within their rights to place restrictions on you as a tenant;
• Lease lengths are something to take into consideration too. While your lease may well be centuries long, it may be much shorter, making your flat hard to sell if you have a lease of under 80 years;
• The quality of your property will be decided by the quality of your landlord, if they are particularly lacklustre, that will affect the quality of the upkeep of your property.

While you own leasehold property you are subject to the rules put in place by the landlord. However, you do still effectively own your property. As such you are entitled to a number of rights as a leaseholder, but for these rights to be upheld, their are a number of responsibilities you have to undertake yourself.

Leaseholder rights

•  The right to get information about any service charges or insurance;
• The right to know the freeholder’s name and address;
• The right to be consulted about certain maintenance and running costs;
• The right to challenge certain charges under some circumstances.

Leaseholder responsibilities

The lease that you sign when purchasing a leasehold property will outline your responsibilities as a leaseholder. If you do not maintain these responsibilities, you could be taken to court. These conditions vary but can include:

• Needing permission to make alterations to the property;
• The amount you will have to pay towards maintenance costs;
• Whether you or your landlord has the responsibility to deal with interior repairs and disputes with neighbours.