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What are your rights with a leasehold property?

Leasehold is one of the two major legal ways of owning a property in the UK (with the other being freehold). Here’s a useful guide on what it entails, what your rights and responsibilities are and how to resolve any disputes. 

What is a leasehold property?

there are two major types of property ownership: freehold and leasehold.

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Freehold essentially means that you own a property outright, including the land that it is built on. You can alter it without having to consult or negotiate with any individual. However, you’re responsible for maintaining the property and the land that it is on. 

Leasehold means that you only have a right to occupy the property for a specific length of time — you do not own the property outright. The typical length of a lease is between 99 and 125 years. 

The leasehold is held or bound by the terms of a legal document known as a lease. It clearly sets out the rules and conditions under which you are entitled to live in the property. This includes any relevant restrictions and obligations. 

You can find out whether a property is freehold or leasehold by searching for it on the Land Registry’s website. A small fee for the service is payable online using a debit or a credit card.

What types of properties are usually leasehold?

Most flats and maisonettes are leasehold properties, while most houses are freehold. Some houses, however, can be leasehold too. In such a case, it’s likely you will own the property but not the land it is built on. 

What are the charges for a leasehold property?

In a leasehold, it is the freeholder’s (or the landlord’s) duty to maintain the building’s common areas, such as the stairs, lifts, the roof, garden and the entrance hall. Many freeholders employ a management agency to handle this duty.

The costs, however, will be shared with leaseholders in form of a service charge. The amount charged varies from property to property, depending on the exact type of maintenance work needed. 

Some freeholders might also ask you to put money into a sinking fund to help cover any unexpected maintenance work that a building might need in the future.

The Money Advice Service advises making sure you are aware of the service charges before you put in an offer on a property, since this might affect whether you can afford to live there. 

What are your rights?

A lease will contain a list of all your rights as a leaseholder. Though this list may vary from one lease or property to another, you generally have a right to: 

  • Information – including the freeholder’s name and contact address, as well as a summary of services charges and insurance and how they have been calculated.
  • Consultation on major (qualifying) works – this includes building works that cost more than £250.
  • Consultation on long-term work contracts – this could be any work that lasts more than a year and costs the leaseholder more than £100.
  • Challenge service charges – to seek a determination of your liability to pay and the reasonableness of the charges.

What are your responsibilities?

Typically, your lease will inform you of the conditions you have agreed to. It will inform you, for example:

  • If you need permission to make any alterations to the property
  • How much you’ll have to pay to maintain the property
  • Whether you or the freeholder is responsible for repairs
  • Who is responsible for dealing with other issues such as noisy neighbours

How do you resolve disputes?

As with any agreement, disputes can sometimes crop up between a freeholder and a leaseholder. As a leaseholder, you can try to resolve the dispute directly with the freeholder.

If it seems like you’re not getting anywhere, there’s no need to panic. There are several resources available to help you. 

One option is to access free advice from the Leasehold Advisory Service. they can help with issues such as service charges, extending your lease, and buying the freehold. 

Another way forward is formal mediation, but you’ll have to pay for it. Costs start at around £50 per hour, plus VAT. If a mediation does not work, you can apply to a tribunal as a final resort.

Final word

With a leasehold, you do not own a property outright and cannot freely make any alterations without consulting the freeholder or the landlord first. This might make it seem like you’re getting a raw deal when buying this kind of property. But that is not necessarily the case.

As noted by the Leasehold Advisory Service, with a well-written lease and an appropriately managed building, a leasehold property should provide a perfectly good home and a secure investment. 

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