Freehold and Leasehold Ten Things You Should Know

1. Most flats are bought on a leasehold basis. This means that you do not own the property outright. You buy the right to live there, usually between 99 years up to 125 years, though some leases actually run to 999 years.

2. When the lease expires, the property goes back to the freeholder. The tenant is allowed to remain in the property, paying rent at the current market rate.

3. Property law dates right back to the Middle Ages, and thus throws up some strange anachronisms, one of which is the leasehold system.

4. There are more than two million leaseholders in England and Wales.

5. A downside of owning a lease is obviously that it expires; it is difficult to get a mortgage on a property with less than fifty years on the lease.

6. In central London where property costs are high, short leases are common, discounts as much as fifty percent on the purchase price of a flat if there is fewer than forty years on the lease.

7. The majority of properties are purchased on a freehold basis, you then own the property outright and therefore have all the responsibilities that go with that.

8. A third form of property ownership has been devised known as commonhold; each flat owner has a stake in the building. This usually applies to new developments.

9. Ground rent and service charges are required to be paid by leaseholders. These charges are payable to the freeholder or a managing agent(he looks after the property on behalf of the freeholder).

10. The freeholder is now responsible for giving the leaseholder a detailed statement of exactly what the service charge includes, for example, maintenance costs, repairs and building insurance and may also include lift maintenance, lighting, cleaning and gardening.

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