When it comes to property ownership, there are two types of contracts: freehold and leasehold. A freehold contract gives the owner full ownership of the property, including the land on which it sits. A leasehold contract, on the other hand, gives the owner the right to use the property for a set period of time, typically between 99 and 999 years, while the land remains owned by the freeholder.

In a leasehold contract, the owner of the property, known as the leaseholder, pays rent to the freeholder for the use of the land on which the property sits. The leaseholder is also responsible for maintaining and repairing the property during the term of the lease.

Leasehold contracts are common in the United Kingdom, where the majority of flats and apartments are sold on a leasehold basis. In recent years, however, there has been controversy surrounding leasehold contracts, particularly in the case of new build properties. Developers have been accused of selling leasehold properties with onerous ground rent charges and unfair fees, leaving leaseholders with significant financial burdens.

It is important for anyone considering buying a leasehold property to fully understand the terms of the lease and the obligations that come with it. This includes understanding the length of the lease, any ground rent charges, and any service charges that may be payable. It is also important to ensure that the lease allows for the property to be sold or sublet should the need arise.

When a leasehold contract comes to an end, the property reverts back to the freeholder. In some cases, the leaseholder may have the option to extend the lease, although this can be a complex and expensive process.

In conclusion, a leasehold contract is a common arrangement for property ownership in the UK, but it is important for prospective buyers to fully understand the terms of the lease and the obligations that come with it. With the current controversy surrounding leasehold contracts, it is more important than ever to do your research and seek professional advice before entering into a leasehold agreement.