Owning leasehold property is a common practice in England and Wales, but not everyone is 100% sure what it means. Someone will look at property floor plans, make a viewing and will say, “I found the home of my dreams, but it’s a leasehold”.
What does this mean?
Well, it’s not necessarily a bad thing, after all a leasehold is the most common way to own a flat, maisonette or apartment in England and Wales. The other way is called freehold, in which you will own the property in its entirety. With a leasehold, you will only own the property for as long as the lease determines. This could be anywhere from 99 years to 999 years depending on when the lease was made.
I have heard the term “ground rent” being passed around. Do I have to pay this?
Unfortunately, there is no way around paying this regular rent paid to the landlord. The fees are annual and can range from as low as £10 to as high as £200 and in some cases, the price may increase. It is the responsibility of the solicitor to provide you with this information. Nevertheless, it is often a better idea to ask what the ground rent is, if the price will increase and what the consequences of potential increases may include.
Do ‘service charges’ apply to me if I buy a leasehold flat?
This is another fee you will need to plan for. The service charge covers the costs of maintaining the building in which your apartment, flat or maisonette is located. The price will also cover the use of communal areas. Most often you will be asked to pay annually and in advance. How much this fee will be depends on the condition of the building and its age.
I’m considering buying a leasehold flat. How will the block be maintained?
Once you have bought a leasehold you will become a leaseholder. Just like any other business agreement, there will be a list of responsibilities and rights as a leaseholder. Your landlord, typically a freeholder, will also have their list of obligations and rights described in the agreement. Just like another building, your flat will need internal and external maintenance. For example, your flat may have a lift that requires regular maintenance or central heating in the communal areas. While the freeholder will be responsible for maintaining these services, the cost will be passed to the leaseholder. This is called the service charge. The freeholder will also use managing agents to make sure their buildings are kept up with.
How do I check on fire risks in a building where I would like to buy a leasehold flat?
You will find all you need to know in the building’s fire risk assessment, a copy of which will be provided to you by your solicitor. It is mandatory that all buildings in England and Wales keep an updated copy of this assessment.
I would like to make some alterations to my leasehold flat after I buy it, but will I be able to?
This will depend on the leasehold you have bought. Some will forbid any alterations, others will allow them and others might allow them so long as specific permission is granted. This is something you should check before taking out a lease. Then, you will want to approach the building manager working on behalf of the landlord.
I hope to be able to sublet a leasehold flat I’d like to buy, but will I be able to?
Once again, this will depend on the terms outlined in your lease agreement. Some might allow subletting, and others might not. It will be important to check this with your landlord before buying the leasehold.
Can my leasehold expire?
Yes, your leasehold, like another tenancy, has an expiration date. You do have the right to extend the time for as long as two years after the lease date, but this will involve paying the freeholder a considerable fee. Furthermore, you may have the right to stay on in your leasehold after the termination date, but this will be at market rent.