Leasehold refers to a property tenure where a person, the leaseholder or lessee, is given the right to occupy and use a property for a set period of time. This is accomplished through a lease agreement with the property’s freeholder (or landlord), who retains the ownership of the land itself.
The lease agreement will define the length of the lease, rent, responsibilities of both parties and other terms and conditions. Lease terms can vary widely, but common lengths are 99, 125, or 999 years. During the leasehold period, the lessee is often responsible for maintenance, insurance, and other property-related costs. The value of the leasehold property may diminish as the lease term shortens, especially as it approaches a critical threshold known as the “marriage value,” which usually occurs around 80 years remaining on the lease. Extending a lease or purchasing the freehold can be an intricate and potentially costly process.
In some jurisdictions, owning a leasehold property can be somewhat complex and may come with a variety of challenges, particularly when it comes to selling or mortgaging the property. It is advisable for potential leaseholders to fully understand the terms of the lease and consult with legal professionals specializing in leasehold properties. Leasehold is a form of property ownership where the right to use the property is leased for a specific period, but ownership of the land remains with the freeholder. It’s a common arrangement in various parts of the world, particularly for apartments or flats.