One thing our estate agents get asked again and again is ‘how do leases work’. Understanding leases can be confusing, so we’re not surprised we hear this question so often, nevertheless, as the purchaser or owner of a leasehold flat, it is in your own best interest to understand the legal nature of your ownership.
This guide aims to help you*:
- Understand residential leaseholds.
- Be clear on what your rights are.
- Be clear on what your responsibilities are.
What is a Leasehold?
Leasehold flats are most often in purpose-built blocks, in converted houses, or above retail properties.
Leasehold ownership of a property is essentially a long tenancy, you will have the right to buy, sell, and occupy the property for the term of the ‘lease’ (this is usually for 99 or 125 years).
If you buy a leasehold property, you will usually own everything within the four (or more) walls of the property. Everything from the floorboards to the plaster belongs to you. However, the external or structural walls will usually not belong to you. The things you own are referred to as the ‘demised premises.
The structure and other common areas of the building, as well as the land it stands own, will usually be owned by the freeholder, also known as the landlord. The landlord is responsible for upkeep and maintenance of the building, but they will recover the costs from leaseholders through services charges.
What is a Lease?
The lease is the contract between the leaseholder, and the landlord, this gives conditional ownership for a fixed period. The lease is an important document. It is also important that leaseholders understand it.
It is difficult to change the conditions of your lease after you have already bought the property, so make sure all obligations on the lease are acceptable before you purchase the home.
The lease sets out the contractual obligations between the two parties, who is responsible for what, who is contracted into what, and the terms of the lease.
What are Your Rights?
Firstly, you have a right to ‘quiet enjoyment’ of the flat, for the term of the lease. This right is implied by law, even if it’s not specified in the lease. ‘Quiet enjoyment’ simply means the right to reside in the premises without unreasonable interference from the landlord. You also have the right to expect the landlord to maintain and repair the building and the common parts (unless you have a ’self-repairing’ lease).
What are Your Responsibilities?
Mostly, this will be to keep the inside of the flat in good order, to pay any maintenance costs on time, to behave in an appropriate neighbourly manner, and lastly, to not do certain things without the landlord’s permissions, for example subletting or alterations.
Should you Buy a Leasehold Property?
If you are looking to buy a flat, as opposed to a house, you don’t have too much choice. Present property laws in England and Wales effectively mean that a flat must be a leasehold. There are some instances where leasehold properties are sold with a share of the freehold, but this is not so common.
Owning a leasehold property should not worry you, as long as you know your rights and obligations there is no reason why the flat shouldn’t be a perfectly good home for you.