A leasehold property is a form of tenure where the buyer essentially purchases the right to occupy a property for a specified period, known as the lease term. Unlike freehold properties, where the buyer owns both the property and the land it sits on, leasehold ownership is limited to the duration of the lease agreement.
The Basics of a Leasehold Property
Leasehold properties are typically residential flats or apartments, but they can also include houses. The lease agreement outlines the rights and responsibilities of both the leaseholder and the freeholder, who retains ownership of the land. Leaseholders often pay an annual ground rent to the freeholder and may also be subject to service charges for the maintenance of communal areas.
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One critical aspect of leasehold properties is the potential for lease extensions. As the lease term diminishes, the value of the property may decrease, making it more challenging to sell.
Leaseholders have the option to extend their lease, providing security and potentially enhancing the property’s value. However, this process can involve legal complexities and costs, so it’s essential for leaseholders to be aware of their rights and obligations. Typically, leaseholders have a legal right to extend the lease as long as the property meets certain conditions. The lease can usually be extended by 90 years with a maximum of 999 years.
Leasehold ownership also comes with certain responsibilities. While the freeholder typically oversees structural maintenance and external repairs, leaseholders are often responsible for the upkeep of their properties. Additionally, service charges may cover expenses such as building insurance, landscaping and general maintenance of shared spaces.