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First Time Buyer - nervous about Lease

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Hi,
I'm in the process of buying my first property - a GFF. It's divided into 2 buildings one over the other. I'm getting confused about Leasehold, Freehold, Landlord etc....

The whole building is owned by the Freeholder (Landlord), who did the original conversion. He owns the FFF and rents it on a short term tenancy. The GFF is owned by the current Leaseholder - from whom I'm buying.

My solicitor has only just been told about this Landlord and it's a bit of a surprise to me. She is trying to find out the full implications of this and I know details will be contained in the lease (which is 999 years) but......can anyone advise me along the lines:-

1. What are the most obvious differences between being a Leaseholder rather than an outright owner.
2. Am i just a glorified tenant? I wanted to 'OWN' my first home. I know it may seem pedantic but it just concerns me - I appreciate I can still realise any value that the property sees during my tenure.
3. If the Freeholder (Landlord?!) owns 'The Building' (presumably the outside) then I guess it maybe to my benefit if the lease shows that he is responsible for some of the repair costs.

Sorry, I know this is all a bit vague and I really need my solicitor to examine the lease. But if anyone has any general advice, experience of this type of arrangement then I'd really appreciate it.

Comments

  • Doozergirl
    Doozergirl Posts: 34,075 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    There doesn't seem to be a direct link to the page but if you go to http://www.lease-advice.org.uk/ then click 'Lease Advice Publications' on the left and then 'Living in Leasehold flats - a guide to how it works' you will get a comprehensive explanation of what it means to you.

    1. A freehold property owns the land and the house which sits upon it. However, a true freehod flat would actually be unmortgageable, which is one reason why leases exist. In a ground floor flat, you need the roof above the first floor flat to keep you dry. The first floor flat needs your structural walls to stay standing. A lease forms a contract where all flats undertake to maintain their properties correctly to afford all other flats with the right of 'support and protection' (walls and rooves ;))

    Your solicitor will know exactly what a freeholder/landlord is, and their importance in flats. It may be a surprise to you, but it certainly won't be to her. Almost every flat out there which is 'owned' by someone is owned in the same way as yours. Some people own a share of the freehold, but they still have leases; it's complicated ;)

    2. Not really, no. It's a very long lease, a tenancy if you like, but it doesn't mean that you refer to yourself as a tenant when you're got a big fat mortgage to pay off. The bank would never give you a mortgage if they felt that it wasn't yours to keep. You can do pretty much what you want with it, within the terms of the lease. You'd have to seek permission to knock walls about, which can't be unreasonably witheld, but it's ultimately to ensure the building is sound and you're not devaluing it. If you let the lease run down to 0 years, the actual flat would revert to them, but you have many legal rights to prevent it from happening. At 999 years, you don't have much to worry about.

    3. Wrong. You are responsible for repair costs.

    The flat upstairs will also have a Lease like yours, the tenancy upstairs is not to be confused with your lease. They are totally different things.
    Everything that is supposed to be in heaven is already here on earth.
  • KiKi
    KiKi Posts: 5,381 Forumite
    Part of the Furniture 1,000 Posts
    Hi Steerpike.

    There are other people who can probably explain better than me, but here's a brief and probably not technically accurate description:

    Freeholder - owns land, organises repairs and maintenance for 'walls and roofs' and communal areas like hallways

    Leaseholder - owns a flat / area inside a building (*all* flats have leases); responsible for paying all maintenance costs to freeholder for building. May also have to ask permission from freeholder for certain things like knocking down walls.

    Landlord - is a leaseholder of a flat (like you'll be) who then rents it out to tenants.

    Most houses are freehold and therefore no lease exists.

    You can be both a leaseholder and a freeholder at the same time. Eg: you own the freehold to a building with 3 flats in it, making you responsible for communal maintenance which you charge back to the leaseholders. You have 2 leaseholders, Mr X who owns flat 1, and Miss Y who owns flat 2. You then decide to buy flat 3 yourself to live in, and you are then leasing it to yourself. As with Mr X and Miss Y, you are also responsible for paying the maintenance costs - to yourself!

    You could also - as well as being the freeholder of the land, and the leaseholder of flat number 3 - end up being the landlord of flat 3, too if you decided to rent it out to tenants and not to live in it.

    It's a chain of responsibility:
    Freeholder
    |
    Leaseholder
    |
    Landlord

    But you can be one, two, or all three of those things.

    I hope that helps you a little? :)
    KiKi

    ETA - Okay, that took far too long to write and in the meantime Doozergirl has put a much better explanation than mine in place. :grin:
    ' <-- See that? It's called an apostrophe. It does not mean "hey, look out, here comes an S".
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