25 July 2018 by Leah Veasey

Tenants’ Tales: Miss Browne’s Shiny New Flat

A series of blogs following the lives of fictitious characters designed to help explain the legal aspects of  leasehold living in a fun yet educational way.

Tenant's Tale

After much deliberation and browsing of estate agency windows, Miss Browne took the plunge and purchased her first property, for her and her pet poodle, Max.  She knew her budget, the location was perfect – 15 minutes from  the school that she worked at, close enough but not too close – just round the corner from Max’s favourite park, and while there was no ensuite, the two bed flat she’d found otherwise ticked all the boxes.

Miss Browne booked an appointment with her family solicitor, to sort out the paperwork and purchase her dream flat.  “What do you mean, there’s a lease?! I’m buying this place, not renting it!” she cried indignantly, when her solicitor tried to explain the process to her.

Unfortunately, Miss Browne’s understanding of buying a flat is not at all uncommon – many buyers, particularly first time buyers, fail to understand the difference between leasehold and freehold.  And really, who could blame them?

So, what is the difference, and how do you spot it?  Freehold ownership is outright ownership of a property, which is not limited by time – you own that property forever and ever, or at least until you sell it or pass away.  Most people will own their house on this basis (although there are pockets of leasehold houses across the country).

Leasehold ownership, on the other hand, is ownership for a specified period of time.  Rather than buying the actual flat, Miss Browne is buying the right to live there for a certain number of years.  How long a period that is will be determined by lease, which will, amongst other things, specify the length of ownership.  We call this the ‘lease term’.

And guess what?  She only gets what’s left on the lease, not the original term.  If the lease was granted for a period of 99 years back in 2000, then Miss Browne will only be buying 81 years.  With each year that passes, the lease will get shorter, and the value of the flat will decrease.

The other key point is that someone still needs to own the freehold; this person will generally be referred to as the freeholder or the landlord, and will own the full extent of the building, out of which the leases are granted.  They will have a number of rights and obligations, potentially including a right to charge the flat owners a ground rent, (“I’m not paying a rent, that’s ludicrous!”  squawked Miss Browne), although this is not normally a large sum.

Not understanding that they are bound by the terms of a lease is one of the biggest causes of disputes that I come across in my day to day work.  What flat owners seem to forget, or just do not understand, is that a lease is a contract, and buying a leasehold property binds you to the terms of that contract.  Once you’ve understood that very key principle, the next challenge is understanding what the lease says!

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