There is plenty of confusion among property owners in England and Wales (the law in Scotland is somewhat different) as regards the real meaning of leasehold when referring to their flat or apartment. You will see apartments marketed on occasion as having a ‘share of freehold’ and we deal with this in a separate piece of writing.

The majority of houses in England and Wales are freehold tenure. This means that the ‘owner’ owns the edifice and the land at the same time. Technically, the freeholder owns the plot down to the middle of the earth and above it to the top of the sky.

In contrast, under leasehold tenure, there are a minimum of two parties that ‘own’ the property. These parties are the freeholder – now and again named as the ‘landlord’ or ‘reversioner’ (defined in a while) – and the leaseholder – now and then called the ‘tenant’ or ‘lessee’. One can even see in legal shorthand the lessee referred to as L and the freeholder as F.

At this juncture we should clearly make a distinction between ‘short leases’, ‘long leases’ and ‘Assured Shorthold Tenancies’. The formal definition of a long lease is one that was in the beginning granted for not less than 21 years. Leasehold legislation relates to ‘long leases’, as would be the case with the majority of apartments in England and Wales.

Confusingly, the label ‘tenant’ is used to refer to the long leaseholder in much legal vernacular. This tenant is different to the tenant in an Assured Shorthold Tenancy (AST), a style of rental covenant created in the 1988 Housing Act which is the default tenancy style in the private rented sector. An AST is a short-term contractual relationship (often around 6 months) between someone who is allowed to reside in a apartment (or house) by the ‘leaseholder’ in return for a rental payment.

To make it even more confusing, both apartment-owners and private rental tenants pay a rent. In the case of the AST tenant, it is a per month rent by and large to the leaseholder. This provides them the right only to occupy that dwelling. The leaseholder or apartment owner also pays a rent, a ‘ground rent’, to the freeholder. This is mostly paid every six months or every year and is more often than not between £20 and £200 every time under the terms of the original lease.

Normally in blocks of apartments there is one legal owner for the freehold – essentially the land and generally the structure resting on it – and there is an independent agreement called a ‘long lease’ for the flat owners. It should be noted that from time to time there are other parties between the freeholder and the leaseholder such as owners of ‘head leases’ or ‘intervening leases’ and you need to be certain one understands the correct line of ownership. This can be exceptionally complex and you may well need the support of a solicitor or surveyor, ideally a member of the Association of Leasehold Enfranchisement Practitioners (ALEP). One will furthermore need to start with copies of the relevant leases.

The intricacy of the ownership can come as quite a shock for a lot of neighbours who have paid for an apartment or flat to discover that in point of fact they no more than apparently part-own it. Usually the lease is longer than the remaining term of the majority of people’s lives so it amounts in practicality to possessing the property outright. In spite of this, in theory, when the lease runs down to zero, the apartment becomes the sole property of the freeholder. Given that the majority of leases of apartments for sale are significantly more than sixty years, most buyers will not live to see the day this occurs. If nothing is done, the flat would go back to the freeholder, reverting to them. This is why one will sometimes hear the freeholder referred to as the ‘reversioner’.

About the author
Andrew Szebeni is part of the management team of the Association of Leasehold Enfranchisement Practitioners. ALEP has more than 100 members, each vetted before joining. They include solicitors, surveyors, intermediaries, managing agents and other professionals in England and Wales specialising in the field of leasehold enfranchisement. Have look at the searchable list of vetted members at http://www.alep.org.uk/membership/.

Read realistic advice about the best spinner – please make sure to study this page. The times have come when proper info is really within one click, use this opportunity.