There are two principal ways of owning a property, either leasehold or freehold.
This is a method of owning property (usually a flat) for a fixed term but not the land on which it stands. Possession of the property will be subject to the payment of an annual ground rent. When the lease expires, ownership of the property reverts back to the freeholder. Nearly all flats in London are leasehold. Lease lengths vary and most common are 99, 125 (in the case of ex local authority) 500 and 999.
- Mortgage lenders like there to be at least 50 years left at the end of a mortgage term (i.e. 75 years in total).
- The lease includes enforcement covenants, rights of way and access, repairing and maintaining covenants, details of ground rent.
- The lease length may be extended by agreement with the Freeholder at a specified cost. This can be expensive if there only a few years left on the term
- A service charge is usual but is not essential; some blocks have a separate managing agent employed by the Freeholder.
This method is outright ownership of the property and land on which it stands. A freehold estate in land (as opposed to a leasehold) is where the owner of the land has no time limit to his period of ownership. It is possible to own a share of the freehold the Freeholder divides up his responsibility and the leaseholders become directors of their leasehold company.