Posted on 22nd November 2018 at 15:42
Where a Freehold means that you own the property and the ground it is built on; owning the Leasehold means that you Lease the property from the Freeholder and you have the use of it for a specific period of time.
Leasehold and Freehold are terms that are usually glossed over however whether a property is Freehold or Leasehold (and more specifically the terms of the Lease) can often determine whether a property is worth purchasing or not.
Flats are generally what springs to mind when you ask most people what a Leasehold property is. This is typically because Leasehold properties were developed so that properties could be more easily managed a case in point may well be a block of flats which are Leased to individual Leaseholders and the Freeholder will hold manage the common parts such as corridors or stairways. On the other hand, many houses are increasingly being held as Leaseholds whereby the Freeholder will own a development plot or an estate, lease the houses on the plot and manage the roads or grassed areas of the plot.
As a Leaseholder you will have essentially a contract with the Freeholder which will set out the length of the Lease (Mortgage Lenders don’t like to lend on a Lease which has less than seventy years left on it) along with various terms and conditions, which are known as covenants. It is important you read the covenants, in particular the restrictive covenants, as these are the covenants that tell you what you cannot do at the property. For example; some restrictive covenants prevent you from keeping certain pets at a property, parking work vans on your driveway or even hanging washing out to dry. Often if a Leaseholder wishes to make changes to a property, add an extension or even a television aerial they will have to seek permission from the Freeholder. It may by easy to ‘forget’ to obtain permission and get away with it…. that is until it comes to selling your property. Some Freeholders will charge you for granting their permission to make changes to your property, but you can rest assured that they may charge you much more for granting their permission after the work has been done. To make matters more complicated many Solicitors will insist on seeing permission certificates from the Freeholder prior to completing a purchase.
Leaseholders will often be charged ground rent and service charge by the Freeholder. In order to enforce the terms of a Lease the ground rent must be set. Historically, if the ground rent was minimal and the Freeholder did not want to go to the hassle of collecting the money then the ground rent would be set as ‘Peppercorn’ this is literally means what it says on the tin or rather the pepper grinder! So instead of collecting money in theory the Freeholder could collect a peppercorn from you! If you are unsure about your ground rent or need a conveyancer to look at a lease contact MG Legal, property solicitors in Longridge, Garstang and Lancaster. Fees can be a major source of contention between Freeholders and Leaseholders with many ground rents being upwards of £200 per year and fees on many Leasehold Flats being around £1000.00 per year.
As the term of a Leasehold decreases the closer the property gets to reverting to back to the Freeholder and so the value of the property is also likely to decrease. Think cake… (rarely does there come a time when I don’t think cake) the more cake there is the more money you are like to pay for it.
Want to know more about Lease extensions? Our property lawyers are available locally to you just search MG Solicitors in Lancaster, Manchester, Garstang or Preston.
Service Charges are levied by the Freeholder (sometimes referred to as Landlord) to recover costs that they incur or the running and maintenance of a building or plot of land. Generally, the Freeholder is under an obligation to provide various services, but they are also entitled to charge for the provision of these services.
For more details of what Freeholders can charge, conveyancing in Lancaster or Leasehold properties is general please contact us now on 01995 602 129 or via email@example.com.
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