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Leasehold and Freehold

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  • Leasehold and Freehold

    Can someone on here please just basically describe what the difference is, what they mean and the advantages and disadvantages of them when developing property?

  • #2
    Google and Wikipedia can often be more help to you than a forum such as this.....

    and that's all the help you'll get from me for now.

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    • #3
      Yeah i tried them tbh but i'm still not totally clear, ok i understand freehold but not the exact implications of leasehold really.

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      • #4
        leasehold Definition

        Properties on long leaseholds like flats etc become massively devalued when they become under 40/50 years left.

        I believe the freeholder has to offer the property to the leaseholder at the end of the leasehold, but im not sure how they work out a price.

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        • #5
          Alrighty, thanks bud (y)

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          • #6
            It's a bit of a complicated subject to be explaining over the net to be honest.

            Forgive me if i'm wrong but...

            A Lease is a contract your binded to, usually to rent.

            Longer term is leasehold where you own the property, but you dont own the land it sits on.

            If you develop a property and the leasehold expires, the freeholder of the land can go through tribunals and not renew the lease if they have a good reason (planning permission for like 50 flats might do it, who knows).

            If they do renew they can set the price within reason as well.

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            • #7
              From someone outside of BTL, buying on leasehold would put me off - surely owning the land under freehold would offer much more security?

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              • #8
                In England and Wales a flat that has its own freehold where other flats in the same building have separate freeholds is not mortgageable. This is because ther eis quirk in freehold law that prevents positive covenants (e.g. to pay money or carry out maintenance) from being enforceable against property owners merely because they own a property.

                So A builds a block of 6 flats and sells them freehold to BCDEFG. Each of them covenant with A to maintain their part of the building. B can't sue C if his flat is above B's and he is not keeping it weather tight unless B & C have entered into direct covenants with each other.

                If A had granted leases to BCDEFG and imposed similar covenants and also agreed to enforce the covenants against each lessee then Bwould ask A to sue C if he was in breach.

                People think that the freeholder has the land and the leaseholder the building. It isn't quite like that. The leaseholder has the buildings and any land it is on for a period of years. He can do what he likes with it during that period SUBJECT to anything to the contrary in the lease, and obviously in lots of cases there are plenty of things to the contrary!
                RICHARD WEBSTERwww.rwco.co.uk
                As a conveyancing solicitor I want to be helpful (England/Wales only) but can't accept liability for this.

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