Estate in Land - what’s the difference?

When buying a property, the title to that property will either be a freehold or leasehold title.   Your property lawyer will be able to advise you whether your property is a freehold or leasehold title.

Purchasing a property with a freehold title means that you will own an estate in land and able to have ownership for an indefinite duration.  The holder of an estate in fee simple absolute in possession is known as a “freeholder”.

Purchasing a property with a leasehold title means that you will own an estate in land which will be for a fixed maximum duration. Therefore an interest in a leasehold title will be for a limited period.  A term of years absolute is known as a “lease or leasehold” estate and is carved out of the freehold estate. 

It is usual for flats to be held with a leasehold title.  In such cases the landlord (the freeholder) or their appointed agent may collect an annual ground rent and sometimes charge a monthly fee known as a service charge. Such costs are attributable towards the upkeep and maintenance of any structural parts or common areas of a development.

As a leasehold title is for a limited period of time, it is essential to ensure that you have a good term of years left to run on the lease.  Ideally a lease will have initially been granted for a term of 999 or 125 years.  The longer the length of term left to run on a lease is obviously more attractive to any future purchaser of a property.  It is also essential for lending purposes where a buyer may need a mortgage to facilitate a purchase of a leasehold title.  It is usual for a high street lending institute to require a minimum of 70 years unexpired lease term from the date of the mortgage.  If a term of years is less than 70 years, then ideally you would want to approach your Landlord to enter into a lease extension of the term of years.  However, given the complex nature of Landlord and Tenant law, it would be advisable to instruct your property lawyer to act in this capacity for you.


Oldham Marsh Page Flavell are Solicitors in Melton Mowbray.

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