What is a lease?
A leasehold title is ‘carved’ from a freehold title. A leasehold title gives the legal owner of that title (“Lessee”) sole possession and control of part or all of a wholly owned building for a limited period of time by granting a lease.
Once the period of time granted by the Lease (‘the Term’) ends, the owner of the Lease title loses his right to occupy and control the property.
A leasehold title is always subject to the rights and control of the legal owner of the freehold title. The owner of the freehold title (‘the lessor’) can control how the tenant can occupy and use the property by setting terms and conditions in the lease (‘lease agreements’).
Lease titles are generally granted for periods of at least 99 years. The most common form of transfer title is that of a flat in a building that has been converted into flats or a ‘block’ of flats.
The landlord owns the main structure of the building and those parts that are not within any particular floor (for example, corridors, stairs, entrances, paths) (‘the common parts’) and is responsible for the maintenance and repair of the structure and common parts. The tenants (‘the tenants’) are responsible for keeping only the part of the building that is within their leasehold title (‘the disappearance’) and for observing the terms and conditions established by the lease. The landlord will also collect an annual rent (‘Land Rental’) and a service charge (to pay for the maintenance of the structure and common parts of the building by the landlord).
If the Lessee does not observe the terms and conditions set forth in the Lease, the Freeholder may terminate the Lease Term and regain the Leased property.
Beware of the Head-lease
The Lessee may (subject to the terms of the Lease) grant an additional Lease (a sublease) of the Leased property. The Tenant will then be the ‘Principal Tenant’ and the owner of the sublease will be its tenant. It is important to check if the lease you are buying is a sublease or a main lease. You can only find out by checking the freehold title, which will list all the leases granted from the freehold title.
If you purchase a sublease, you will be subject to the terms and conditions of the main lease in addition to the terms and conditions of your lease. If the Principal Lessee does not observe the terms and conditions of his lease, the Freeholder may terminate the Principal Tenant. This will result in all leases granted under that main lease coming to an end as well.
There are provisions in the law for a subtenant to appeal to the courts to prevent his lease from ending. There is a limited period of time to make this application. If you don’t know that your lease is a sublease in the first place, you won’t be able to make this request and your lease may end unexpectedly.
Lease Title Classes
Absolute lease title
Freehold leasehold title will only be granted when freehold (and any other intermediary primary leasehold title) has been granted with freehold title or has not been registered has been deducted to the satisfaction of the registrar in the HM Land Registry.
Again, as with the freehold title, the title must be such that ‘a competent professional advisor could advise the buyer who wishes to accept it ‘ and that the landlord’s right to grant the lease has been approved by the HM Land Registry.
As with Freehold Absolute Title, the registrar believes that a defect in title is such that it will not cause the holding under title to be altered, it can still grant absolute title.
An absolute lease title is subject to the implicit rights and express covenants, obligations, and liabilities attached to the freehold title, as well as the lease title, including the covenants, obligations, and responsibilities in the lease. Generally, a lease must have a duration of seven years or more in order to register.
Leased property title
As with freehold title, rented title is granted when the owner’s title is based on adverse possession, or when title deeds have been lost or legal title and ownership cannot be proven. person applying for the title is in a real occupation. or on the income and earnings receipt and it is not possible to register the title under any other kind of title.
Qualified lease title
A qualified lease title is very rare. Qualified leasehold title is granted when the applicant’s legal right to title to the property can only be established for a limited period of time or is subject to reservations whose effect combines to mean that the title is not a good title to the property. An example of this is when the transfer of property is done in breach of trust, such as when someone sells without the agreement of another party who has a legally enforceable right to the property.
Good leasehold title
The good tenancy title is granted in circumstances where the absolute property title (or intermediate title of which the good tenancy title is granted) has not been deducted from the HM Land Registry. In these circumstances, there is no guarantee that the lease has been validly granted. The right of the owners to the leasehold title and even the existence of the title, will always be open to challenge. In light of this, mortgage companies and banks are reluctant to make loans on properties with good leasehold titles.