To have or to leasehold?

When you buy a home, you will either be doing so on a ‘leasehold’ or ‘freehold’ basis – though some properties are sold with a ‘share of the freehold’.

If you buy a leasehold property, you’ll own the home itself but not the land it stands on. This usually means you’ll pay a ground rent to the owner of the land, as well as a service charge for maintaining any common areas. Ground rent is an ancient – and controversial – phenomenon.

In some cases leaseholders only need to pay a ‘peppercorn’ rent of perhaps a few pounds a year to maintain the lease. In other situations, however, annual ground rents can run to hundreds or even thousands of pounds. This has been a talking point for hundreds of years, with the 1977 Survey of London referencing the rising popularity and value of leasehold estates – and thus ground rents – in Mayfair as early as 1721. With this in mind, it’s easy to see why some claim that ground rent has no place in the modern property market.

The government estimates that there are more than four million leasehold homes in England alone, and traditionally these have almost exclusively been flats. In recent times, however, developers have been selling houses as leasehold, too.


Kindly shared by Which?