How a property is owned is known as the property tenure. The tenure determines what is owned, by whom and over what period of time that individual or organisation owns the land and, or property. The tenure of a property also has further implications about legal obligations and costs associated with the ownership. There are two main type of property tenure in the UK, freehold and leasehold. In a freehold, a defined property and parcel of land is owned outright with no time limit on the period of ownership. In a leasehold, an individual or organisation purchases a right to occupy the property and/or land for a fixed period of time. The land and property’s structure then owned by someone else, being the Freeholder. There are often also further costs associated with this including ground rent and service charge payable the freeholder. You can read more about freehold versus leasehold properties and common pitfalls in our article on the matter here. As a general rule of thumb, usually houses are freeholds and flats or apartments are leasehold, however it is possible to have a house that is a leasehold. In this article, we consider the less common leasehold house in more detail
In May 2024, the Department for Levelling Up, Housing and Communities report official statistics in relation to leasehold dwellings in the UK in 2022-2023. During this time period, there were an estimated 4.77 million leasehold dwellings, approximately 19% of all housing, in England. Of the 4.77 million, 28% or 1.3 million were leasehold houses, whilst the remaining 72% were flats and apartments. Considering regional differences, the Northwest of England and the Yorkshire and Humber regions had the highest proportion of leasehold houses than other parts of England.
In line with the above data, some parts of the UK, such as Manchester and the wider Yorkshire, Lancashire and Humberside areas, there are leasehold houses which date back some years. Often these properties are older terraces or semi-detached properties built on large estates where the original landowner retained the land on a long lease such as 999 years. Some of these properties have a ground rent obligation where a fee is paid to the landlord on an annual basis. These tend to be low amounts, or set at a peppercorn. Whilst the majority of leaseholders have purchased the freehold, it is possible that some are still held as a leasehold. There are options available to purchase the freehold to these properties and your conveyancing solicitor should be able to guide you through the process.
In the 1980’s the government introduced a scheme known as shared ownership, which was designed to help individuals get onto the property ladder. Speaking broadly, the schemes offer individuals the opportunity to purchase percentage share of the property and then lease, or rent, the remaining amount over a number of years. There are then options to purchase additional shares in the property, and in most cases, up to the full 100% in various stages, known as staircasing. These shared ownership properties can be flats and apartments, but also leasehold houses. Often the leased portion of the property is owned by the Local Council or a Housing Association, and they will be the landlord. Alongside the rent paid for the leased percentage of the house, there is also often ground rent and service charge to pay for communal areas.
Whilst freehold houses can come with covenants on the title, which may be historic in nature and restrictive by today’s standards, leasehold houses, like leasehold flats and apartments do often have a lot more restrictive covenants and lease terms. For example, there can be restrictions over the use of the leasehold house especially when it comes to affordable and shared ownership housing schemes. You may also need specific permission from the Landlord for making any alterations to the property, including choosing different paint colours in some circumstances. If the house is part of a new build or even existing estate, there may be obligations to communal gardens, private and estate roads which extend far beyond your actual property.
If you own a leasehold house, that is not part of a shared ownership scheme, there are options for buying the freehold. You can purchase the freehold via an informal route involving negotiation with the landlord, where you effectively ask the landlord if they are willing to sell and negotiate the terms of the sale and purchase. There is a formal route for purchasing the freehold if both you as the tenant and the house itself meet specified criteria. Depending on the Landlord’s response to the formal route, determines how lengthy and complex the process becomes. You can switch from one route to the other so it is worth trying an informal route first before considering the formal route. Where the landlord is the Local Council or Housing Association, it may be that they have established processes and whilst there are often costs associated with this, and timeframes, it can be a more straightforward process in the long run. It is essential that if you are considering this route, that you get good sound advice from an experienced Solicitor and Surveyor.
There has been a lot of talk in Parliament and changes in laws recently which affect leasehold properties. In the main, there is a move towards improving terms for leaseholders. It is important to consider all aspects of a leasehold property before committing to a purchase, especially as it could have costly implications further down the line.
At Express Conveyancing we have a wealth of experience in handling leasehold property. Please get in touch with a member of our team to see how we can help you.
