Leasehold
Leasehold is a property tenure where the buyer owns the property and its land for a fixed term but not the land it stands on permanently. At the end of the lease term, ownership reverts back to the freeholder or landlord, unless the lease is extended.
What is Leasehold?
In the property market, leasehold is a common form of property ownership, particularly in apartments and flats, but it can also apply to houses. This type of tenure allows the leaseholder to own the property for a set number of years, as defined in the lease agreement, which can range from a few decades to 999 years. The lease outlines the leaseholder's rights and responsibilities, as well as those of the freeholder, who retains ownership of the land.
Leaseholders typically pay an annual ground rent to the freeholder and may also be responsible for service charges covering the maintenance of communal areas and the building's structure. The lease agreement includes provisions for how the property can be used, any restrictions on alterations, and the process for selling or transferring the lease.
The value of a leasehold property can significantly diminish as the lease gets shorter, particularly when it falls below 80 years, making it essential for leaseholders to consider the length of the lease in their purchasing decisions. Leaseholders have the legal right to extend their leases or, in some cases, to collectively purchase the freehold with other leaseholders in the building, known as collective enfranchisement.
Frequently Asked Questions
Leasehold is a term that you may have heard before, but you might not be sure what it means. Here are some common questions and answers to help you understand what it means.
