Tenure Freehold & Leasehold Meaning
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Tenure, Leasehold & Freehold Meaning
Need to clarify the meaning? Our experts explain the differences between freehold and leasehold quickly and easily.
Tenure is a collective term that relates to the nature of the owner’s title to a property. For example, do they own it on a freehold or a leasehold basis? Put simply, tenure relates to something you possess or hold.
Having a freehold tenure means you have the full rights of ownership over that property and the land it sits on. However, if you are looking to buy a property, do check and confirm that this is the case. Never assume a house is freehold and a flat is leasehold; there are occasions when the opposite could be true in each case.
Read here for our quick questions around Tenure, Freehold and Leasehold Properties.
Under English & Welsh Land Law, the term “tenure” simply means the way in which an interest in land is held. There are 3 recognised tenures, Freehold, Leasehold & Commonhold tenure.
In England & Wales, there are Freehold tenure, Leasehold tenure and Commonhold tenure.
In Scotland, property law does not use the same concept of freehold and leasehold. Instead, all land in Scotland is held either as a heritable property (which means there is outright ownership) or it is under a lease.
Under section 1(1)(a) of the Law of Property Act 1925, a freehold estate is technically described as an “estate in fee simple absolute in possession”.
What does this phrase mean – “Estate in fee simple absolute in possession”. In simple terms – it means outright ownership of both the land and any building on it – with no fixed end date!
As the ownership duration is unlimited, the freehold ownership continues indefinitely. It only comes to an end if the outright owner choses to dispose of it by way of sale, gift or otherwise.
As freeholder owner, you have absolute exclusive rights to possess, occupy, use, mortgage or sell the property. You also have freedom to mortgage the property depending on criteria. All actions are of course subject to any legal restrictions e.g. planning laws etc.
Leasehold Tenure grants a set number of years, that are absolute. Giving possession for a fixed period of time (usually 100 years plus for residential), rather than indefinite ownership.
When a leasehold tenure expires, the land and buildings within it, revert to the ownership of the freeholder, unless the lease is extended or the freehold is purchase from the freehold owner.
At the end of the lease the land and buildings revert to the freeholder unless the lease is extended or the freehold is purchased.
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If you have a leasehold tenure on a property, it means you own the property but someone else owns the land the property is sitting on. This is most common where flats or apartments are concerned. Since there are several properties that are essentially built on top of one another, it would be impossible for each flat owner to own the land it is built on.
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The landlord, i.e. the owner of the land, would charge ground rent to all those with leasehold properties on that land. The land would also be leased for a specific number of years. The shorter the leasehold, the less valuable the property would be. This is an important point to note if you are considering getting a leasehold tenure to a property. There is also the question of what might happen when the lease nears its end. There are pros and cons to each type of tenure that relate to responsibilities for each.
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