There are two ways of owning property in the UK; Leasehold or Freehold. I have noticed that there has been an increase in the number of clients enquiring as to whether and why they should purchase the freehold to their property. So I thought it would be a good idea to write an explanation which would be easy for all to understand and a quick reference for those enquiring.

Now property law can be a little tedious for some. It's a bit like marmite you either love it or hate it, I thankfully love it!

Sometimes your budget may not stretch to the full purchase of a house. By purchasing leasehold, whilst the freeholder will still technically own the property you are able to lease the property for an agreed up front fee and annual maintenance fee known as ground rent.  Many leases start at a 99-year term while some run for 999 yearswith ground rent being little more than a “pepper corn” per annum. The freeholder will grant you use of the property for a specified period of time, known as the term of the lease. Most mortgage lenders will provide a mortgage where there is at least 75 years left to run on the term of the lease.

The property will be yours to use until the term of the lease has expired. At this time you will have to either give the property back to the freeholder, or request to purchase the freehold of the property. This will mean that the property will be yours to enjoy forever and you will no longer be required to pay towards ground rent.

In summary if you do buy leasehold you don't actually own the property, all you own is the right to live there for the period of the time that is left on the lease.  The team here at JCP Solicitors would always advise a home owner with 75 years or less to look into the purchase of their freehold, or home buyers who are looking at a leasehold property to find out as much information about the terms of the lease and the freeholder as possible before putting in an offer. If there are only a few years over the 75 years remaining on the lease, they should seriously consider asking the vendor to purchase the freehold before the sale.  On purchase of a leasehold property you must wait for 2 years before you can purchase the freehold. This means that should you need to refinance or sell before your 2 year period is up, the stature of the ownership of the property may make this difficult.

For more information or an informal discussion about the sale of your home, or the purchase of a new one, please contact me, Shelly Fuge on 01792 529609 or email me at shelly.fuge@jcpsolicitors.co.uk