Unlike a freehold property, which means you own the property and the land upon which the property is built on, a leasehold property means a Lease is granted to you by the Landlord to occupy the property for the term granted.
The term of the Lease will continue to reduce and if the length of the Lease falls below 80 years, the premium payable to the Landlord for a lease extension is likely to increase. A shorter term will also reduce marketability as most mortgage lenders will not lend on a short Lease.
The Lease sets out the rights granted and obligations of both the leaseholder and the Landlord. There are normally restrictions under the Lease, which could include obtaining Landlord consent for alterations to the property. It is important to read the Lease to ensure that it will not affect your intended use of the property.
The Landlord is expected to maintain and repair the building structure and communal areas. As a leaseholder, you will be responsible for service charge payments which would normally cover a share of the costs of maintenance, repairs and building insurance. The amount is likely to vary each year depending on the expenses incurred and whether any future expenditure for major works is required.
In addition, ground rent is also likely to be payable. This is often a nominal amount but is also a requirement of the Lease and must be paid on the due date.
For further information about Purchasing a Leasehold Property please contact the Residential Conveyancing team.