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FAQs

YOUR PROPERTY INVESTMENT QUESTIONS ANSWERED

We are one of the leading ground rent and property investment specialists in the UK. Don’t risk reducing your profits by selling your ground rents privately – come directly to the experts for an instant sale without the hassle!

To make the overall transaction easier, we have compiled a list of our most frequently asked questions – however, if you have any other queries, or you’d prefer to speak with one of our experts directly, contact us today on 01202 901408.

 


 

What is a ground rent?

Ground rent the annual rent paid under the terms of a lease by the owner of a building to the owner of the land on which it is built. In other words, the Leaseholder pays ground rent to the freehold owner of the land – the Freeholder.

What is the difference between a leasehold and freehold?

There are two main elements that are involved when owning a property in England and Wales - the freehold and the leasehold.

  • The freehold is the outright ownership of land or property for an unlimited period.
  • A leasehold is a temporary, fixed term right to occupy land or property.

A person who owns the freehold of a property or land may grant a lease on it to another person.

What sort of building does I have to pay ground rent for?

Ground rents apply to the vast majority of properties, including commercial factories or shops, restaurants, clubs, and residential apartments and houses.

What happens then when the period specified in the lease comes to an end?

When a lease comes to an end the tenant no longer has a right to occupy the property and has to give back possession to the landlord. The lease will usually include a clause which states that the tenant will ‘quietly yield up possession’ on the termination of the lease.

Does the reduction in the term of the lease affect my property’s value?

Yes. 

At the beginning of a long lease there will be little difference in value between a freehold and a leasehold property. As the lease gets shorter, the leasehold property reduces in value. At first the reduction is quite small, but as the lease gets shorter and shorter the value begins to fall more rapidly. Therefore, the lessee may decide to apply for a lease extension.

How can I extend a lease?

Strictly speaking, there is no such thing as a lease extension. All lessees have the legal right to surrender the existing lease and acquire a new lease on their property. If for example, the existing lease were to have an unexpired term of 75 years then the new lease would be for a term of 75 years + extra extended years.

To obtain a new lease the lessee will have to pay a premium to the landlord. Generally, the shorter the existing lease the higher the premium for the new lease will be. It makes sense, therefore, for the owner of a leasehold property to apply for a new lease sooner rather than later.

How do I start the application process?

Firstly, you must establish that you are a ‘Qualifying Tenant’ under The Leasehold Reform, Housing and Urban Development Act 1993. To be a qualifying tenant you must have been the registered owner of a property with a long lease for at least two years.

Having established that you have the legal right to acquire a new lease, and armed with the name and address of the freeholder (landlord), you are now in a position to start the formal process. You must be aware, however, that it is a formal and legal process. To actually start the formal process, you must serve a notice on the freeholder.