Buying residential property – Freehold & Leasehold explained
In the first of our series of articles about buying property in England, Residential Property Partner, Alison Treble explains the difference between freehold and leasehold and the implications for buyers.
The term ‘conveyancing’ refers to the legal process of transferring the ownership of a property from one party to another. There are two common forms of ownership of property in England: freehold and leasehold.
Freehold
Most houses are freehold which means your ownership is not limited in time and you will usually be buying the physical structure, walls, the roof, foundations of the house, the site on which the house is built and any garden. Don’t assume if you are buying a house it will be freehold though.
Leasehold
Most flats or apartments are leasehold which means:
- You will be buying the right to live in the property for a specific period of years, often 99, 125 or 999 years. You will however, usually able to apply for a new lease in the future subject to a lump sum payment for the new lease.
- During your period of ownership, you must comply with the terms of the Lease of the property. Usually, the property owner will be responsible for the repair, maintenance and decoration of the interior of the flat while the landlord will be responsible for the repairing, maintaining, decorating and insuring the structure and communal areas of the building.
- In the Lease the property owner (you) is called ‘the tenant’ or ‘the lessee’ and will have a ‘landlord’ or ‘lessor’ who owns the freehold title in the land or the head leasehold title.
- You will be required to reimburse the landlord by way of service charge for your share of the costs incurred by the landlord in carrying out its responsibilities. You will also pay the landlord an annual ground rent.
At present, most leases will include an obligation by you to pay ground rent. When you purchase a leasehold property you should first check with your mortgage lender that it is happy with the level of ground rent contained in the lease.
If you are planning on buying or selling a residential property, it is important to appoint a specialist residential property lawyer to act for you to ensure that the process is efficient and your interests are protecting. Get in touch today with our Residential team on 01225 750000 or email Alison.treble@mogersdrewett.com and let us help you get moving today.