What is a leasehold property? (Apartment, Maisonette or Coachhouse)
Leasehold is where you buy the right to occupy a part of a building (demised premises) and you become a long leasehold tenant. You do not own the building structure but have leased the internal shell of the apartment/maisonette/flat for a certain amount of years set out in the lease.
What is a lease?
A lease is the contract between the Landlord (owner of the building) and the Leaseholder (tenant).
A lease grants you the right to occupy the building for a set period (term) from when it is originally granted by the Landlord. Typical terms may grant the ‘Tenant’ the right to occupy the ‘demised’ space for 99 years, 125 years or sometimes 999 years. At the end of the lease term, the ownership ‘reverts’ to the Landlord and the tenant must vacate it.
When you buy an apartment, the term does not start again, you are purchasing the remaining time on the lease since it was originally granted. This is important as the value you pay for a lease often falls if it has less time left on it.
The lease sets out the details of the demised premises and the obligations of the leaseholder. Modern leases often enclose a plan of the building, highlighting the living areas relating to the leased property.
The lease should not be confused with a short term tenancy agreement. This is the type of agreement that is signed by people who rent a property for a short period of time e.g. 6/12 months. Please check your lease to see if you are allowed to sub let/rent your property out and if so, what conditions you must comply with to get the Landlord’s permission to do this.
What are the tenant’s legal obligations and responsibilities?
These are set out within the lease and should be read and understood before legal completion takes place. Your solicitor or conveyancer who provided legal services should have advised you of key points in respect to the terms and conditions that you were legal agreeing with.
Typically, it will say what behaviours are expected of you and what you should expect from your neighbours and your Landlord (who still has the right to access your property in certain circumstances). Perhaps most importantly, it lays out your contractual obligations that you have accepted to contribute to the upkeep, maintenance and sometimes improvement of the building and grounds/estate in which your new home/investment is located.