Leaseholds

Almost 3m people own property on a leasehold basis, whereby they own the right to occupy the property, but not the building itself. All leaseholders have the legal right to get together with their neighbours and buy out the landlord.

What does being a leaseholder actually mean?
Leaseholders own and are responsible for the maintenance of everything within a property’s four walls, including floorboards and plasterwork, but not usually the external or structural walls. The lease should list the rights and responsibilities of the leaseholder and those of the freeholder. It is quite common for leaseholders to have to get the freeholders’ consent before they can extend the property or change the fencing, for example.

How important is it to stick by the rules of the lease?
If you break the terms of the lease you could lose your home or have to pay compensation. The freeholder must give you written notice and time to put things right before he can go to court to enforce this. Similarly, a leaseholder can take legal action against the freeholder if the terms of the lease are broken, for example if the common parts of the property are not maintained.

What are my rights as a leaseholder?
If you buy a leasehold flat, your lease will usually spell out the freeholder’s responsibility to maintain and insure the outside and common parts of the whole building. If they or their managing agents don’t do this, you may be able to take court action to get compensation or to have repairs done. As a leaseholder, you will pay a service charge for repairs.

How much is the service charge likely to be?
It can vary from just a few hundred pounds to thousands of pounds annually. The lease should say how the service charge is worked out, what it covers and how it is divided between the leaseholders. You may also have to pay a fixed sum into a reserve or “sinking” fund each year to cover major repairs, such as replacing the roof.