What is a ‘Freeholder’?
A freeholder is a person or company that owns the freehold of the building. This means that if you own your property on a lease, the freeholder will own the property outright. They are usually responsible for the repair and maintenance of the exterior and common parts of the building. A freeholder is also called a landlord. It is possible to have an intermediate lease which could mean that your landlord would be different from the freeholder.
What does ‘Share of Freehold’ mean?
This essentially means that you will have a lease over your flat as well as a share in the freehold of the whole building. This may be a share in a company that owns the freehold. Alternatively the freehold may be held by up to four individuals. It is important to understand the responsibilities involved in having a share in the freehold which may include liability with others to repair and maintain the exterior of the building and the common parts.
What is ‘Leasehold’? - Key points
- A lease is a contract between the leaseholder and the freeholder giving conditional ownership of the property
- Typically for a fixed term of 99, 125 or 999 years
- A lease sets out both freeholder and leaseholder obligations to the building (i.e. pets, letting, flooring etc)
- Leaseholder usually pays ground rent and towards maintaining and managing the building or estate
- The freeholder is usually responsible for structure, exterior and communal areas of the property.
- The most serious decline in value is after 60 years, as the flat then becomes increasingly unable to mortgageable
- Below 50 years it is virtually impossible to mortgage.
- Lessee has a right to extend the lease, so long as the lessee has owned the flat for two years.
- A lease is extended by way of a Deed of Variation
- The value significantly increases in value and becomes saleable at full market value.
- At the expiration of the lease, the flat reverts back to the freeholder; in other words the freeholder gets the flat.
Am I a qualifying tenant for lease extension?
Generally, you will be a qualifying tenant, if your lease was more than twenty one years when originally granted and you have been the registered owner of your flat for two years. Please note that if your freeholder is the Crown, National Trust or part of a building within a cathedral precinct your flat might be excluded from the right to extend your lease but specialist advice should be taken.
Lease extension can be a complicated process. We recommend you get professional advice.
For further information please contact us.