Contrast between leasehold ownership and freehold ownership

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UK Law

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Table of Contents
UK Law...........................................................................................................................................1
Introduction......................................................................................................................................2
Contrast between leasehold ownership and freehold ownership:....................................................2
Concerns regarding the leasehold market for new build homes:.....................................................4
Proposed Reforms:...........................................................................................................................5
An overview of proposed reform to the process of enfranchisement for leasehold homes:............6
Conclusion.......................................................................................................................................7
Bibliography....................................................................................................................................8

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Introduction
A lease is the making of a legal agreement through which monetary payments are made for the
purpose of utilization of a land or a building or any other property. This utilization is done for a
fixed period of time as stipulated in the agreement of the lease, and as per the rules of the
contract and the laws of the state. The property, which can be leased, can be either tangible or
intangible or movable or immovable under the laws.
Under the property laws of United Kingdom, there are two primary methods of granting of
ownership. These forms of ownership include, freehold and Leasehold. The former lays
emphasis upon the complete ownership of the property while the latter deals with the functions
of leasing the property from the freeholders under the rules and regulations stated by the
freeholders1. There are many differences between these types of ownerships. The contrast
between the two has been portrayed in the report, and which ownership is preferred more over
the other. Besides these, there are various other elements, which are added to the report for a
clear understanding of the subject2. The main issues with regard to the leasehold and the freehold
ownership are discussed. The various elements for reforming the above issues are also stated in
the report with subtle recommendations for resolving the issues. Further, a brief overview has
been granted in the report for the enfranchisement process for leasehold homes when the owner
desires to purchase the freehold is given.
Contrast between leasehold ownership and freehold ownership:
Freehold ownership means and includes that a person who owns a building upon a land for
eternal time. A name of the person who owns such a land would be present at the registration
1E. M.Letsoalo, and M. J. J. Thupana, "The repeal of the land acts: the challenge of land reform
policies in South Africa",Social Dynamics, 39(2), 2013, 298-307.
2Europese Unie, "Consolidated version of the Treaty on European Union and the Treaty on the
functioning of the European Union", 2008.

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documents of the land and he would called a freeholder. This is because a freeholder possesses
the absolute title. The key features of leasehold ownership include the lack of paying of annual
ground rent. He possesses the responsibility of taking care of his building solely. Another form
of ownership is called the leasehold ownership. There are various differences between the two. A
leasehold ownership means a taking a lease from the freeholder ownership of lease3. The
freeholder here is often referred to as the landlord. The leases undertaken under this kind of
ownership is for long period of time for instance, 120 years or up to 999 years. a leaseholder
possesses a contract with the freeholder which lays down the legal rights and obligations of the
parties from both the sides. A freeholder has the duty of controlling and protecting the common
areas of the building4. The common areas include the staircase corridors, main entrances, way to
the gardens, all the common areas of the outer and the inner portions of the building. Where the
leaseholders have the right to manage, they possess more responsibilities. In comparison with the
freeholders, the leaseholders are bound to pay the payment for maintenance and the yearly
charges of service this also includes the various charges of the insurance in the buildings.
Another comparison between the two arises in case of the paying of the annual ground rent. The
leaseholders are bound to pay the same. There are certain restrictions imposed upon the
leaseholders which the freeholders do not possess. The leaseholders would have to bide by the
rules stated by the freeholders. It is the duty of the leaseholders to follow all the rules,
regulations and the terms of contract of the lease. Otherwise he would be liable to pay damages
to the freeholder if any inconvenience caused. The freeholder is also empowered to forfeit the
lease completely5. Thus, these were the basic features of a leasehold ownership in comparison
with the freehold ownership.
There are various reasons as to how the leasehold ownership is becoming less favorable. The
value of the leaseholds are declining in the contemporary era. When the period of lease is
reduced to nil number of years then the property goes to the freeholder again. If a lease has been
3Colin Lizieri, "Property ownership, leasehold forms and industrial change", Industrial Property.
Routledge, 2018, 181-194.
4Thomas Hobbes, Thomas Hobbes: Leviathan (Longman Library of Primary Sources in Philosophy), Routledge,
2016.
5Hazel Marshall,EGLR 2013 V3, Estates Gazette, 2017.