If you're looking at flats, you'll be contemplating a leasehold. But what does that mean?
Practically all flats in the UK are sold on a leasehold basis, whether house conversions, new build flats or purpose-built blocks from the 50s. Leasehold means that you own the property for a set number of years, as specified in the lease – this can be anything between 99 to 999 years. The flat can still be bought and sold within that period.
The actual owner of the building is the person or company who owns the freehold. The property then reverts to the owner once the length of time allocated in the lease runs out. With a leasehold property, the term of the lease does not start again – if, in 2008, you buy a property which has a 99 year lease, and the lease began in 1990, then you could only retain possession of the property for the remaining 81 years.
Anthony Essien says as a property developer you should be aware of leases which only have a short time left to run. 'The value of a property can drop dramatically as the end of the lease approaches, and you could lose money as a result. Also lenders are less willing to advance money to a prospective buyer as the lease could become too short to provide adequate security for the loan.'
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