Leasehold Property Fees Review

Leasehold Property Fees Review.

The Government has announced an 8 week consultation period for the review of leasehold property legislation and practices.

Freehold Explained

Many people think they own their land on which there house stands and do not know it is the monarchy that legally owns all of the land in Britain.  We (as the ‘owners’) are granted a ‘freehold’ tenancy.  I.e. technically we are just granted a ‘tenancy’ – you may have heard of ‘joint tenants’ and ‘tenants in common’ Most people own homes under ‘freehold’ which means rights have been granted to the land to pay no rent to the ultimate owner i.e. the monarch.

Leasehold Property

Mainly flats and apartments with common areas use the principle of leasehold as it is difficult for one flat above another to own the land and common areas and grounds need maintaining.  In short, the land is still owned by the ‘freeholder’ and the freeholder then rents/leases that land to you for say 125 years to 999 years.  You then pay a ground rent each year.  This is usually a small rent, but in some cases freeholders, such as the builders of a new housing development then sell the freehold on to investors.  It is then that problems occur if the new freeholder starts to increase ground rents over and above what was expected.  This may mean your house becomes difficult to sell if the ground rent is expensive or indeed totally unsaleable if the outstanding period of the lease is less than 75 years.

75% of leasehold properties are flats and apartments but there are over 4m leasehold houses.  If the lease period ends, it is the freeholder that owns that land and all that is on it.

Extend Lease or Buy Freehold

You can legally extend your lease or indeed attempt to buy the freehold.  Both can become expensive as you are usually required to cover all of the legal fees.  It may be that the freeholder is asking too much money to extend the lease or sell the freehold.  There is then a procedure of using the Leasehold Valuation Tribunal (part of the English court system) to settle the matter, again this can be expensive.

This is why the Government is looking to legislate further to protect leasehold property owners.  They may even ban the practice of new build property being leasehold with builders only being allowed to sell freehold property.