Understanding Residential Leases

When you buy property, you either buy the freehold – which means you own the property outright as well as the land it is built on – or you buy the leasehold – which gives you the right to occupy that property for a specified amount of time. As some leaseholds can last for up to a thousand years this is effectively the same as owning the property, but nevertheless, your property will revert to the freeholder when your residential lease expires.

Residential leaseholds are most often seen when buying flats or apartments, where the building itself is owned by the freeholder. The freeholders are responsible for the upkeep and maintenance of all communal and external areas of the building. For example, it is the freeholder's duty to clean the hallways and stairs, provide lighting, and also paint and repair the outside of the building.

In return for doing this, the freeholder is entitled to ask the leaseholders for an annual service charge. This will be divided between the owners of the different flats in your building, generally according to the size and value of each flat. Your obligation to pay this charge will be written into your leasehold agreement.

Legal issues relating to residential leases

Sometimes there can be disputes about costly repairs to the outside of the building that need to be undertaken. The freeholder may drag their feet or insist that the leaseholder is responsible. This is generally not the case; leaseholders are of course responsible for repairs and upkeep within their leased property, but not outside. However, leaseholders are typically responsible and obligated within their leases to pay the costs of the repair, maintenance and renewal of the outside of buildings and grounds through the payment of service charges to the landlords or their managing agents. As a leaseholder, you may not be the owner of the freehold title, but you are entitled to have a say in how the building is managed and can ask to see accounts relating to this. Ultimately the freeholder and leaseholder should work together in harmony, but if a deadlock arises legal advice may be needed.