Whether you are buying a property for the first time or looking to move house, it is important you understand what leasehold houses are. In this guide, we explain everything you need to know about leasehold houses and answer frequently asked questions about leasehold houses.
1. What are leasehold houses?
A leasehold is a form of tenure. According to guidelines from the UK Government, a legal agreement is required from a landlord, also referred to as a freeholder, to allow a tenant to live in a leasehold property. The lease will state how many years the tenant will own the property, for leasehold houses this can be as long as 100 years. After this time period, ownership returns to the freeholder.
2. What are the differences between leasehold vs. freehold houses?
A freehold homeowner is an individual who owns a house and the land it stands on. Alternatively, a leaseholder does not own the land a property is situated on. A leaseholder essentially rents the house from the freeholder. Occasionally multiple people can share a freehold, known as a 'share of freehold', which is commonly seen in flat and apartment developments, according to Moneysaving Expert.
3. Can you make changes to a leasehold house?
A tenant must check their lease to see if they are allowed to make structural or significant changes to their leasehold property. In most cases, a lease will state if the tenant requires the landlord's permission to make any changes to the property, for example, knocking down an internal wall or adding an extension.
4. What happens if a tenant makes changes to a leasehold house without permission?
If a tenant makes changes to their property without the approval of their landlord, a local authority may request they submit a retrospective planning application. Research from Churchill has revealed that in the last 3 years, 39,200 retrospective planning applications have been submitted. It’s strongly encouraged that all tenants check the terms of their lease before starting any changes to a property and to wait for approval from a tenant before any work is begun.
5. Why might a landlord refuse to allow a tenant to make changes to a leasehold house?
There are numerous reasons why a landlord may reject a request for changes, or a retrospective planning application may be refused. Some of the most common reasons for rejection include the development being out of character and the development causing a loss of privacy, as these reasons combined account for 38% of rejected applications.
6. What are the advantages of living in a leasehold house?
Some of the top benefits of living in a leasehold house include:
• They are usually less expensive, as the tenant does not own the property entirely.
• Depending on the terms of the lease, the tenants have less or no responsibility for maintenance of the property. For example, the landlord must repair household goods that require repairs and re-decorate the property when required.
• A leasehold house is ideal for a family or individual who likes to move frequently as they can be used for short-term accommodation.
• There is often an opportunity for the tenant to buy the property outright when their lease comes to an end, this will depend on the landlord's wishes and the terms of the lease, however.
7. What must a tenant consider before accepting a lease?
The most important thing a tenant must consider before agreeing to a lease is how many years they wish to occupy the property. A landlord may be unable to extend a lease or offer the opportunity for a tenant to buy the property, so this must be considered when agreeing to a lease. A tenant must also consider that they must ask a landlord's permission before making significant changes, as mentioned above. If a tenant desires to make significant structural changes to a leasehold house, they should include this in the terms of their lease or perhaps consider another property.
You also have to be wary of unethical ground rent charges for leasehold properties. It’s a growing problem, according to the Guardian, and something your solicitor should advise you on before you buy a leasehold property.
Hopefully, the above information has clarified leasehold houses for you and answered any questions you may have about freehold and leasehold houses. For more information about leasehold houses, contact News on the Block to learn more.
Geoff Aldis, Content Producer and Researcher