Dealing With Leasehold Expiry
Any property that you acquire can have one of two legal ownership criteria. The property can either be leasehold or freehold. Leasehold property means that the house you’re buying is on leased land and therefore after the lease expires, you will not own the land below you. Freehold properties do not have this inconvenience and you own both the land and the house that you purchase.
Leasehold issues can be a headache to both sellers and buyers. As a seller, what do you do when the property you own is nearing the expiry of its leasehold? Likewise, as a buyer, what do you do when you purchase land only to find that the lease is almost expiring? All these are crucial issues that require to be sorted out before conveyancing takes place.
Normally, most leasehold tenures last a duration of 99 years with others going up to 999 years. This means when you’re buying the property, or planning to sell, the lease period could be on its 11th hour. When the lease expires, the land housing the property reverts back to the original landlord. The landlord will then contact you in writing, usually beforehand, to alert you of the impending situation. Upon expiry of the lease, you may have to start paying rent to the landlord. The land lord will then be obligated to maintain the property as the legal owner.
In a twist of turns, the landlord may intend not to continue housing you anymore. This could be due to a number of reasons. Under such a situation, the landlord may start to initiate a process of getting you out. The new landlord may claim that you have neglected the property and thus are no longer fit to own it. Alternatively, the landlord might wish to tear the house down to renovate or build something else.
Legally, the landlord is allowed to initiate a process of removing the house-owner only if they wish to rebuild the house, move into the house or have their family move into the house. Even in such a case, they will have to do so after having presented their case to the court. If the court finds their request to be just, you are entitled to compensation of your house. This may still mean you will have to move all your stuff out though!
Another piece of good news is that you have the right to apply for an extension if the remaining lease is longer than 21 years. Every leasehold piece of land is entitled to a 50 year extension which can only be granted once. If the land you’re housed on already had an extension or you’ve exceeded the required time quota, you’ll have to start paying revised rent fees.
Even better, if your lease is 21 years or longer and you’ve been living there for more than two years, you can buy the freehold back from the landlord. You will need a solicitor and will have to pay for the freehold charges.