Can someone explain leasehold to an idiot

needacamera

So the way I understand it, a leasehold means you own the property for the duration of the lease. The freeholder owns the land it is built on. But I'm wondering what happens to your money if that lease runs out?


I know it's common for the lease to be extended, but let's say it doesn't happen and the freeholder follows the necessary legal steps to get ownership of the house. You got the house for £200k mortgage and by now you have paid it off when this happens. What happens to the 200k? Do you just lose it? Does the freeholder have to buy the house back off you?


Thanks

G_M

At the end of the lease (after 99 years, 0r 125, 999, whatever) the lease expires and freeholder reclaims the property.


How you originally paid for the lease (savings, mortgage, a combination etc) is irrelevant. You paid to buy the lease, or the number of years remaining on the lease at that point (eg 99 - 10 years = 89). In return for your payment, you get to live in the property for that length of time.


There are (free) books you can borrow from your local library explaining how property, and property-buying, works.

jimbog

With leasehold you pay for the right to live there - it never belongs to you. In addition you may have to pay extra charges while you live there. If you want to make any changes you will probably need the freeholders's permission to do so.

With freehold it's yours forever and you can do what you like with it.

needacamera

Thanks for the respones. To me it seems like a massive scam, or am I missing something? There are people investing half to a whole million in property and to think that they may not own anything at the end of it seems strange.

G_M

jimbog wrote: »

With leasehold you pay for the right to live there - it never belongs to you. In addition you may have to pay extra charges while you live there. If you want to make any changes you will probably need the [STRIKE]leaseholder's[/STRIKE]freeholder's permission to do so.

With freehold it's yours forever and you can do what you like with it.

:beer: :beer:

D_M_E

Think of it as being a tenant - when you are a tenant you pay rent to live in the property, the landlord will offer you the choice (or you can offer to pay) of paying weekly, monthly, every 6 or 12 months, to live in the property and for your rent payment you can live there as long as you continue to pay rent and abide by landlord's rules.

At the end of the rent agreement, you either negotiate a new one and continue or move out.

Leasehold is the same - you pay several years' worth of rent in one go.

jimbog

needacamera wrote: »

Thanks for the respones. To me it seems like a massive scam, or am I missing something? There are people investing half to a whole million in property and to think that they may not own anything at the end of it seems strange.

Flats are generally always leasehold as each flat shares a roof, the grounds etc. with all the other flats. Figuring out who would pay for maintenance and services would be a nightmare if each was a freehold

davidmcn

jimbog wrote: »

Flats are generally always leasehold as each flat shares a roof, the grounds etc. with all the other flats. Figuring out who would pay for maintenance and services would be a nightmare if each was a freehold

Why would it? We seem to manage ok in Scotland.

Pixie5740

jimbog wrote: »

Flats are generally always leasehold as each flat shares a roof, the grounds etc. with all the other flats. Figuring out who would pay for maintenance and services would be a nightmare if each was a freehold

Yet it works in Scotland. My title deeds tell me how much of the roof and other shared areas I own and therefore for what I am reposonsible.

jim1999

needacamera wrote: »

Thanks for the respones. To me it seems like a massive scam, or am I missing something? There are people investing half to a whole million in property and to think that they may not own anything at the end of it seems strange.

That's not very realistic though, because after living in a property for 2 years you have the right to extend the lease. You wouldn't let it run down to zero.

I'm sure there are some exceptions, but for the vast majority of leaseholds that is why it isn't a scam.

zagubov

The Irish republic reformed its system in the 1970s. Scotland doesn't really have leasehold for residential property at all anymore. Pretty much the entire rest of the world seems to get by without it.