Many people who purchase a house and in particular a flat or apartment do so on a leasehold basis. This means that the property is only owned by the homeowner for a certain amount of time, which is based on how long the lease is. The land is actually owned by a landlord known as the freeholder and once the lease is up ownership of the property returns to the freeholder.
Flats generally tend to be the types of properties that are leasehold although it can happen with houses as well. Obviously this is something that you need to check if you are considering purchasing a property as well as ensuring you know how long the property lease is.
You need to make sure that if you are going for a leasehold property you look carefully at the lease agreement so that you know about important factors such as rights, responsibilities and options that you may have as the leaseholder. This will also enable you to determine the length of the lease as well as other important information.
As the owner of a leasehold property you will enter into an agreement with the landlord/freeholder, so the property is yours for a specific amount of time. However, you do also have rights and property lease options available to you so this is something to look at if you want to end up keeping the property and being able to pass it down to your loved ones in decades to come. As part of your agreement as a property lease holder some of your rights generally include:
You also have to consider the responsibilities that you have as the leaseholder, as these are also important. Your responsibilities will usually be detailed in the leasehold agreement and tend to pertain to factors such as making alterations to the property, maintenance payments for the upkeep of the property and dealing with certain repairs.
You also have the right to ask for a lease extension from the landlord if you wish to do so, and this is something that can be done at anytime during your ownership of the property. This has become a popular option amongst those who have leasehold properties.
When it comes to a lease extension the period by which you will be able to extend if agreed may be ninety years with a flat or fifty years with a house. Of course, there will be lease extension costs to take into consideration and the cost of lease extension may vary based on a number of factors. Using an online lease extension calculator will provide you with an idea of how much the cost of lease extension might be based on your property and circumstances.
Of course, if your lease is very long such as eighty or ninety years you don’t need to make any rush decisions with regards to sorting out an extension, as you may find that your situation and circumstances change over the years and you decide to look at an alternative route. However, you will usually find that the more time that lapses and the later you leave it, the more the lease extension costs will be so this is something that you need to bear in mind. If you have a shorter lease to start out with you may want to make your decision more imminent, as otherwise your shorter lease period could have a negative effect when it comes to the value of your property.
Although some people may want to look at buying the freehold to their property rather than a lease extension this may not necessarily be a viable option. For example, if you are living in a block of flats at least fifty percent of the other flat owners must want to/be in a position to also buy the freehold. Also, you may find that buying the freehold is not an option due to your financial circumstances. This is where extending the lease may be an ideal solution – plus it also means that you don’t have to get involved in the running of the building if this is not something that is in your lease agreement.
You do need to bear in mind that the landlord is not obliged to extend your lease if you ask for an extension, again unless this is something that was already in your original agreement. This is why you need to make sure that the price and terms that are put forward to the landlord for the extension are going to be seen as favourable, as this will increase the chances of you getting your lease extended.
Other property lease options are available to those that have purchased a leasehold property. It may be possible to make alternations to the terms of the lease, which is sometimes referred to as varying the lease. Of course, this is something that will have to be done with the agreement of the landlord. You can also look at ending the lease by giving notice of at least one month.
Another thing you can consider as the leaseholder is to actually buy the freehold from the landlord, and this is something that you can do at any time during your lease. If you live in a flat and want to buy the freehold you will only be able to purchase a share of it. However, if you live in a house you may be able to buy the freehold in full. It is worth noting that if the freeholder is looking to sell the freehold he or she will usually have to give the leaseholder the right of first refusal.