In the UK we have two types of property ownership Freehold and Leasehold
With Freehold you own the whole of your property. This is the most common type of ownership for houses whether they are detached, semi-detached or terraced
Flats are almost always leasehold. In addition, just to be confusing, so are a few houses but that mostly that occurs on new estates with shared common areas.
With leasehold you tend to share some parts of it with other people. A shared main structure as in a block of flats or in a converted house maybe a shared entrance or roof perhaps, hallways, gardens water pipes or whatever.
The reason leases exist is to create a link or contract between the owners of the various flats in a building so that someone (usually the Landlord) can make everyone comply with their obligations to repair and maintain their own flat and contribute to the cost of maintaining, insuring heating and lighting etc the shared or common parts.
There are other ways of doing this and other countries do it without leases. But in the UK we are stuck with them.
The drawback to leases is that they are for a fixed term and will eventually run out. If you let matters get to that extreme situation you may be able to continue living in the flat as a tenant but you would lose your real ownership and therefore a lot of the value of the property. Not many people let that happen and if they are sensible they get their lease term extended back to a safe length..
The main reason for this is that a landlord will always charge a fee for extending a lease back to a longer term and the amount of that fee increases as the lease gets shorter. And the amount a freeholder can charge for a lease extension jumps up when the lease has 80 years or less left to run. The reason for this is that once a lease gets that short the freeholder becomes entitled to a share of the increase in value that arises from extending the lease. So check your lease and if the term left is getting anywhere close to 80 years talk to us about extending it now!
In London a lot of leases were granted just after the 2nd World War back in the late 1940's. and 1950's And ever since then leases have been more and more common as houses were converted into flats from the 1970's onwards and blocks of new flats are built now.
Originally people thought a 99 or a 125 year lease was long enough not to have to worry about it expiring, but time passes. We get older clients who have lived in their flats for 60 or more years. If they now try to sell ( or if they have died and their children are trying to sell ) they find they may only have 40 or so years left on their leases
Another common situation is a client who bought a flat in the 1980's who now wants to sell and finds their lease is down to 80 or less years to go.
In both cases they really have to get their lease extended. Fortunately that is an area we specialise in and if you think you may be in that position give us a call on 020 3633 4060
For more information go to our specialist website at www.lease-experts.co.uk