We tend to think about property in terms of bricks and mortar and a roof over our heads. English law views property very differently; rather than buildings, the law is concerned with the area of land on which a structure has been built. As a result, property owners own land rather the structures on top of them which can lead to significant complications where blocks of flats are concerned
Whereas house buyers can simply buy a house and the plot of land it stands upon, prospective flat buyers generally have to buy the right to reside in a part of the property (which will usually be owned in full be someone else). This right to reside is officially recognised through the award of a ‘lease’.
Those who own the land itself therefore hold the most significant form of ownership – the ‘freehold title’. This title can be bought and sold as well as inherited but it will never simply run out. The person with ownership of the freehold title is known as the freeholder and they have the freedom to use the property however they see fit. Many freeholders wish to live on the property which makes ownership very straightforward but others may wish to allow other people to reside on the freehold, hence the need for leases.
It may be the case that the freeholder has another residential arrangement of their own and therefore does not need to live on the freehold at that point. Instead of just leaving the freehold unoccupied or simply selling it to someone else, they may opt to let someone reside in the property for a price. Paying this price will entitle the buyer to live on the property but the freeholder would still be able to take this right away at their discretion, making it quite an unappealing arrangement. Freeholders must therefore give any purchaser legal status (which also allows them to make a profit) and they do this using a lease (usually an agreement for more than 7 years) of tenancy (an agreement for less than 7 years).
A lease effectively gives the purchaser the right to use of live in the land for a given length of time. The lease will often be conditional upon the payment of rent or the way in which the property is used for example. However, unlike a license, a lease gives the leaseholder ‘exclusive possession’, meaning that they can prevent anyone (particularly the leaseholder) from entering their property for the duration of the lease. Whilst this lease can be inherited and sold (with the same conditions it had when first purchased) it will expire, unlike the freehold. The only way to avoid losing your interest in the property when the lease expires is to arrange for a lease extension – click here to read more about extending your lease.
If a number of flats within a block are being sold, each buyer will be given a lease detailing their rights, obligations and any conditions they are under. They will therefore each get exclusive possession of whichever part of the building they hold a lease for. It may be that the freeholder continues to manage and administrate the building but they may instead choose to put it in the hands of a property management company.
Thinking of lease extension or leasehold enfranchisement?Contact our specialists
Expert lease extension and enfranchisement solicitors can be difficult to come by- but our team specialise in this area of law – they spend all their time helping clients extend leases and in buying the freehold of their block.
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