Real estate property rights in England

It is necessary to make the difference between the FREEHOLD ESTATE which corresponds to the free and perpetual property and the LEASEHOLD ESTATE which corresponds to the free but temporary property.

The Freehold Estate

There are several types of Freehold but only one is generally applied, the others having fallen into disuse. By definition, this right is supposed to be the most absolute. It corresponds to the property of the building and the land on which it is built. Freehold is a perpetual right unlike leasehold. It will end only if there are no more heirs and no will has been considered. The property will then return to the Crown. The holder of the Freehole Estate is registered as a landowner in the land register.

Since 1993, the owners of Leasehold can buy the Freehold between them, which explains why more and more apartments are acquired with part of Freehold. If the owner of Freehold wishes to sell, he must give the choice to the Leasehold holder to buy first.

The Leasehold Estate

This is a mode of property ownership in England recognized since the Land of Property Law of 1925. Leasehold is a lower right than that granted by the Freehold and is a freehold property recognized as absolute but granted for a fixed term.The rights of possession enjoyed by the owner of the Leasehole are more limited than those enjoyed by the owner of the property in Freehole.

Three characteristic elements are essential to define a Leasehole:

– Fixed term: The maximum duration must be fixed when the Leasehold is granted. There must also be a date of departure for the lease. The Leasehold can be fixed term (it is granted for a fixed term) or it can be periodic (it is fixed for a fixed term, for example weekly, monthly, annual … and is renewable with a fixed period of notice. It is this notice period which defines the duration of the Leasehold). It is possible for a Leasehold owner to sell his right at any time. When acquiring a Leasehold, the remaining term of the lease must be taken into account. If there are less than 50 years, it will be difficult to find a loan (75 years being the minimum duration to be considered).

– Exclusive property: This is the possibility of excluding anyone from the property, including the owner of Freehold. It is possible for a Leasehold holder to mortgage his property and to rent it (No clause can prohibit renting).

– An annuity to pay: An annuity is generally payable to the Leasehold holder. The terms must be established when the Leasehole is fixed. Generally the Leaseholder must also pay an annual service to the Freeholder to cover the maintenance and repairs of the building and / or common areas where appropriate.

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