ASK THE EXPERTS - July 2007

Busy, busy, busy. We’ve had a lot of enquiries in the first month of Ask The Expert, so thank you all for your interest.  Here are Frank Rogers' answers to three of them.

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What is the difference between Freehold and Leasehold?

When buying a property in England and Wales there are usually only two types, freehold and leasehold. A freehold property means that you purchase the property outright and it will remain yours for generations to come. A leasehold property means that you purchase the property and it will remain yours until the lease expires, usually this is not a problem as a lot of leases are for a period of 999 years.

A lease will usually have a list of covenants (legally binding promises) rights and exceptions that you will have to abide by and these will be set out in the lease. A lease will also have a rent that will be payable every year and if there is a management company, a service charge that is payable every year.

Having said this some freehold properties will have covenants (legally binding promises) rights and exceptions that you will have to abide by and these will be set out in the title deeds. In addition a freehold property may be subject to ground rent.

What is Ground Rent?

Ground rent is a payment that may be collected every year. Many ground rents are for quite small amounts, say £2.00 or £6.00, however, some new build developments will charge more and ground rents of £150.00 are not unheard of.

You can buy a ground rent, but you should always take advice from a solicitor before doing so, just to make sure that you are buying from an individual or company that can sell it to you.

Like anything else you can negotiate if the seller is willing to do so. One calculation is twelve times the current ground rent, but this is by no means a hard and fast rule. The question you should ask yourself is ‘What is the benefit to me of buying the ground rent?’ Sometimes the ground rent may also have rights of consent attached to it which may be of benefit to you.

I’m just buying a house which is Freehold but my solicitor has told me that I will have to pay ground rent every year, is this right?

If you are purchasing a property and your solicitor gives you some advice you should listen to the advice. If you are in any way unclear about the advice then always go back to your solicitor to clarify, they should be more than happy to go over any points that they have not explained sufficiently.

That’s it for this month, please keep those questions coming.

Frank Rogers

Frank Rogers is the Head of the Conveyancing department for Geoffrey Lucas Solicitors

Disclaimer

The above questions and answers are for general information purposes only and must not be relied upon in any circumstances. Always take specific specialist advise for any property matter by instructing a fully qualified solicitor to act on your behalf.


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