Leasehold ownership of a flat is simply a long tenancy, the right to occupation and use of the flat for a long period – the ‘term’ of the lease. This will usually be for 99 or 125 years and the flat can be bought and sold during that term. The term is fixed at the beginning and so decreases in length year by year.
The leasehold ownership of a flat usually relates to everything within the four walls of the flat, including floorboards and plaster to walls and ceiling, but does not usually include the external or structural walls. A garden can be included, unless it is a communal garden for the building. What the leaseholder owns is often defined in the lease as the “Demised Premises”.
It is difficult to change the conditions of the lease after you buy, so make sure that the services provided for and the obligations imposed in the lease are those that you want or can accept. For example, some properties don’t allow pets and it’s your responsibility to check these things before you buy.
When considering the purchase of a leasehold flat, it is important to find out, for personal budgetary purposes, what the current and future service charges are likely to be. Also check if there is a reserve fund, and what plans there are for major works that could affect the service charge in the next few years after your purchase.
The lease will normally require the freeholder to take out adequate insurance for the building and the common parts and will give him the right to recover the cost of the premium through the service charges. This policy will not cover the possessions of individual leaseholders, for which contents insurance should be taken out.
Leases are important because they establish the terms of a leasehold agreement between a freeholder and a leaseholder. They outline the responsibilities of each party, including service charge payments, maintenance, and repairs. Leases also provide legal protection for both the freeholder and the leaseholder, as they can be used as evidence in court if either party violates the terms of the agreement.
Additionally, leases typically include provisions for renewals, extensions, and termination of the leasehold agreement, which can help prevent misunderstandings and disputes.
However, owning a leasehold flat should not be a concern as long as you know and appreciate your rights and obligations. You should make sure that your solicitor explains the terms of the lease fully when you are purchasing and checks any restrictions in the lease, for example, If you intend to let the property or carry out alterations.
With a well-written lease and a properly managed building, a leasehold flat should provide a perfectly good home and a secure investment.
Nicole Hanson, RITTech MBCS
Marketing Executive & PA to the Head of Property Management