Lease extensions – explaining freehold and leasehold

What is a lease?

A lease is contractual agreement between two parties with regards to an item of property. They are most commonly used for property in the United Kingdom (UK) under the term residential lease. If you are currently living in a non-freehold or non-short term rental flat, odds are you signed one prior to moving in. The original term granted on a residential lease usually falls somewhere between 99 and 125 years, which in general seems like a long time. However, if the term of your lease is allowed to run-out without a lease extension notice being served, then all interest in the flat reverts back to the freeholder. This means that not only can you lose your home, but any money you have invested in it as well.

Freehold and leasehold- what is the difference?

If someone owns a freehold over a property it will mean that they are owner of said property or the land that it was constructed on top of. As owner, a freeholder is broadly in control of the property outside of the lease, meaning that they can carry out construction and renovations, subject to the rights of any leaseholders in the building, as they so please as long as they have council permission to do so.

Any leaseholder will have a long-term tenancy agreement with the freeholder, which would usually have been agreed upon and subsequently signed prior to moving into the property. When such an agreement is in place the leaseholder will have the right to live in the property uninterrupted. A leasehold agreement doesn’t equal ownership of the property, meaning that you won’t be able to make any substantial physical alterations to the property itself, without the freeholder’s permission. Furthermore, any leasehold agreement will eventually expire -so if you wish to extend the length of the agreement you will need to serve a notice of extension. Almost every leasehold agreement will be based upon financial remuneration in exchange for living in the property, and provision for an additional regular payment to the freeholder for what are known as “service charges” [to cover premises maintenance and other miscellaneous costs] is also likely to be included in the lease.

How to do I look at my lease?

As leaseholder it is your legal right to read your lease whenever you wish to. You should, of course, have been provided with a copy of the lease by your solicitor when you originally bought your flat. If for any reason, however, you have lost or cannot find your lease – you can get a copy by either asking your freeholder to send you a copy, speaking to your mortgagor or getting one from the land registry. Getting a copy of your lease in one of these ways is likely to involve a small additional fee.

Contact Our Leasehold Specialists

Bonallack and Bishop are expert Leasehold Enfranchisement and Lease Extension Solicitors and can advise you wherever you live in England and Wales.

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