Legal Forms of Ownership

There are two main forms of legal ownership of property in Great Britain - freehold and leasehold.

Freehold Property

In general, if you own the freehold of a house or a piece of land, then you will be the outright owner with no fixed period of time and you will bear the full responsibility for maintenance, repairs and general upkeep. Any person owning freehold property is free to lease their property, subject to any restrictions the deeds may contain.

The deed to your house will be known as the "freehold transfer document" which will contain any rights and obligations. Usually, the transfer document will list any encumbrances (restrictions) on the use of the land, such as rights of way of other parties or sales restrictions. The deeds to your home are very important, and you will find it very complicated to sell your property without them.

Leasehold Property

If you live in a property owned by someone else and have an agreement for a period of time (usually over 21 years and up to 999 years), then you are a leaseholder. The lease is a contract between tenant and landlord that lays down the rights and obligations of both parties and it should be read through carefully by the leaseholder. Leases tend to be different from each other and nothing can be assumed. Once you sign, you will be bound by all the clauses in the contract.

One common theme of all leasehold property is that the leaseholder pays for any general upkeep and repairs out of a service or maintenance charge. When you buy a property, make sure that the vendor has paid all debts and has contributed to some form of 'sink fund' whereby provision has been built up for major repairs in the future. After a lease has been signed then there is little or no recourse to recoup any money owed.

The conveyancing of leasehold property is potentially far more problematic than freehold property, particularly when the flat is in a block with a number of units.

The key points of a lease that should be checked when purchasing are:

• What is the term left on the lease?
• What is the level of service charge, and how is it collected, managed and accounted for?
• What is the ground rent and how frequently will you pay it?
• What are the general restrictions in the lease, for example, are you allowed pets or do you have a designated car parking space?
• Is the lease assignable - can you pass on the lease without the landlord's permission or does it need surrendering at sale or a license to assign?

Occasionally, there is no stated responsibility for upkeep and consequently the environment deteriorates, reducing the value of the property.