Residential Leasehold Property, The Good, The Bad & The Ugly


In recent months there have been stories in the news in relation to Leasehold Properties which portrays them in a negative light, but how much of it is true?

When it comes to property, usually houses are freehold, meaning the owner owns the property absolutely with very few restrictions in relation to how they can deal with the property.  Leasehold properties are generally flats, which are subject to a lease.  The lease can be for any length of time, usually 99 years, 125 years or 999 years. Leases are also usually subject to obligations such as a ‘ground rent’ to be paid to the Landlord to ‘rent’ the space which the property occupies.  At the end of the term of the lease the flat is handed back to the Landlord, and the owner has no further interest in the property.

There is a place for Leasehold Properties in relation to flats, as the leases place obligations on the Landlord to ensure that the Property is insured and maintained adequately, and each flat has the necessary support and protection from the other flats around it.  Furthermore, it is the obligations on behalf of both the leaseholder and the freeholder that make a mortgage lender more comfortable with the security being provided.

There has been a move in recent years for developers to sell a lease of a house rather than the freehold.  These leases tend to have limited obligations on the Landlord with insurance and maintenance of the building being the responsibility of the leaseholder, but the Landlord will still collect a ground rent.  In some developments there are also obligations to pay a service charge in relation to the ongoing maintenance of the communal areas.  It is these leases that are causing concern to property owners, as there does not appear to be any particular need for a lease to be in place, but the ground rent that is required can be a deterrent to prospective purchasers. Some lenders are also reluctant to lend money if the ground rent is considered to be onerous.

While there is currently legislation in place to give the right to owners of leasehold houses to purchase the freehold of their house, there will be an additional premium payable for this, and the process is not quick or straightforward.  As a result, the Law Commission is reviewing leasehold property to see if there is need for reform.

It should also be noted that as the public becomes more informed, developers are now changing their practices and most new build houses are being sold as freehold houses showing that public opinion does have an impact.

Should you own or be purchasing a leasehold property, be it a flat or a house, make sure you take the necessary advice in relation to your rights and options available to you to help you make the right decision for you.

Our Residential Property Partner Pauline Carlin comments:

“Whilst owning a leasehold property can seem like a minefield and quite a scary prospect, I believe that there is a place for leasehold properties in the property world.  Leasehold Properties allow more flexible building arrangements and ensure that the leaseholders rights are protected, and that their investment cannot be devalued by a lack of action on someone else’s behalf (i.e. a lack of insurance of a neighbouring flat), that said with the commentary in recent years in some instances leases have been overused, in unnecessary circumstances.”

If you have any queries in respect of the above, please do not hesitate to contact Pauline Carlin of Pictons Solicitors LLP on 01442 229674 or via email at Alternatively come and visit us at one of our offices!