Difference between Freehold and Leasehold properties

[working woman]

Someone in the Credit Deflation thread was asking about Freehold and Leasehold and not wishing to derail that thread, have answered the question here.

 

The Queen legally owns all the land in Britain.  In Britain the Land Act of 1925 allegedly gave British subjects the right to two kinds of ownership. Freehold and Leasehold.

If you have a freehold, you own your property outright for an indefinite period of time (term). By contrast, a leasehold means that you own the property for a specific term of years only. At the end of the term, the property reverts to the freeholder.

Houses are usually freehold.  Flats are usually leasehold. 

There are some exceptions though, which causes confusion.  

Freehold houses - You are responsible for it's upkeep. 

Leasehold flats - You pay the landlord, the freeholder annual ground rent and together with your neighbours  pay into a savings fund - the Service Charge Fund, to pay for insuring the building and grounds and maintaining it. 

Recently some house builders have been building houses and selling them on a leasehold basis. I don't know how this works, but would imagine there is ground rent to pay to a landlord/freeholder and maybe some rules on it's upkeep? 

Some developments of flats are freehold - the residents  got together and bought the freehold from the original landlord / freeholder. They all collectively pay for the upkeep.

There is also something that is a mix of Freehold and leasehold, that I have come across, such as the house is Freehold, but sits in communal gardens, or an access road, and the residents are collectively responsible for maintaining them. 

 

[working woman]

Q: I am puzzled if you are doing most of the work administering the maintenance charges why you are using a managing agent.

A: We are  aware we could do it ourselves, but choose not to as it is a lot of work and a lot of money involved to be responsible for. 

Q: The only work the agent has to do is raising the service charge demands and handling receipts and payments. Relatively simple routine administration.

A: Our Agent is a Property Management company, they do other tasks, such as vet the contractors they use, create contractor contracts, raise works orders, pay invoices, visit the property, deal with complaints eg noise, arranged our EWS1 Test, deal with non payment of service charge, get quotes for large cyclical works, liaise with the builder and insurance company when problems arise, arrange our AGM, do our annual accounts, draft the annual  budget, deal with paperwork for new Directors, send out sales packs for sellers, create newsletters to update residents on news, do consultations if needed.

Our role? Let them know what needs doing and make sure it gets done.

Q: How much do they charge ?

     Way too much

Q How many apartments in your building?

     2 Blocks/ Buildings and about 85 flats.

 

[sleepwello'nights]

52 minutes ago, working woman said:

 

A: Our Agent is a Property Management company, they do other tasks, such as vet the contractors they use, create contractor contracts, raise works orders, pay invoices, visit the property, deal with complaints eg noise, arranged our EWS1 Test, deal with non payment of service charge, get quotes for large cyclical works, liaise with the builder and insurance company when problems arise, arrange our AGM, do our annual accounts, draft the annual  budget, deal with paperwork for new Directors, send out sales packs for sellers, create newsletters to update residents on news, do consultations if needed.

 

 

I do all that, admittedly for a smaller development. We have 4 low rise apartment buildings and leasehold houses. 50 leasehold properties and about the same number of freehold houses. 

Hardly an onerous task that I do on a part time as and when basis. The biggest bugbear now I no longer live on the development is making sure the landscape contractors keep on top the gardening. 

I don't want to sound boastful, most of the tasks are routine administration.