Introduction

Leasehold ownership of a flat is simply a long tenancy, the right to occupation and use of the flat for a long period – the ‘term’ of the lease. This will usually be for 99 or 125 years and the flat can be bought and sold during that term.

The term is fixed at the beginning and so decreases in length year by year. Thus, if it were not for inflation, the value of the flat would diminish over time until the eventual expiry of the lease, when the flat returns to the landlord, although this is subject to some rights to remain as a tenant in certain circumstances.

The leasehold ownership of a flat usually relates to everything within the four walls of the flat, including floorboards and plaster to walls and ceiling, but does not usually include the external or structural walls.

The structure and common parts of the building and the land it stands on are usually owned by the freeholder, who is also the landlord. The freeholder is responsible for the maintenance and repair of the building. The costs for doing so are recoverable through the service charges and billed to the leaseholders.

A leasehold ownership of a house usually relates to the whole building both internal and external and possibly a garden and driveway. Typically, a leaseholder of a house would be responsible for the repair and maintenance of the whole building.

The landlord can be a person or a company, including a local authority or a housing association.

In addition to the usual leasehold property there is a form of leasehold property referred to as a shared ownership lease where the leaseholder can purchase a share of a property (house or flat) and pay rent on that part of the property retained by the landlord. The leaseholder will have a right to purchase additional shares in the property until they own 100% of the equity. At this point the property is no longer a shared ownership property.

Most shared ownership leasehold properties are granted by housing associations as part of their home ownership programme. Such leases are almost always in a format approved by Homes England. The intention is to provide a first step into home ownership for those who are currently renting and cannot afford to purchase a home at the full market value.

For all new grant funded shared ownership homes delivered through the Affordable Homes Programme 2021-2026 and shared ownership homes delivered through Section 106 the minimum initial stake is reduced from 25% to 10%.