You can buy a property that is
- freehold, when you own the property and the land it stands on, or
- leasehold, when you own the property but rent the land it stands on
A lease can be for up to 999 years. When you buy the property, you buy the right to live there for the duration of the lease.
You have to pay an annual charge for leasehold properties. This is ground rent. You pay ground rent to the person or company who owns the land.
You can redeem, or buy out, the ground rent on some properties. This means you don't have to pay a charge every year.
A lease can stop you from doing certain things. It's important to read and understand the terms in your lease before you buy a property.
Finding out if a property is leasehold
When you are buying a property, make sure to ask your solicitor if it is a leasehold or freehold property.
The solicitor should check if the ground rent account is up to date. If it is not, they can ask the seller to give you an indemnity. This is a legal promise that the seller will pay any ground rent owed before you became the owner.
Finding out who you pay ground rent to
Your solicitor should tell you who to pay ground rent to when you buy the property.
If you don't know who to pay your ground rent to, ask the solicitor who helped you buy the property. Contact the Law Society NI if the firm you used has closed. They can tell you who took over storage of the old firm's records.
You may be able to find out who owns the ground rent by searching the Land Registry or Registry of Deeds.
Ground rent portfolios are sometimes sold at auction. This can mean that a new company will now ask you for payment.
You might get a demand for payment with no other information. Check with a solicitor if you aren't sure whether to pay this charge.
Lease on leasehold property ends
It can be difficult to sell a property if it has a short lease. You can ask the freeholder to extend your lease. But, they do not have to do this.
The freeholder can apply to court for an eviction order if your lease ends. This doesn't happen often.
You may want to redeem your ground rent if your lease has over 50 years left on the lease.
Redeeming your ground rent
You may be able to redeem your ground rent. This ends the requirement for you, or anyone you sell to, to pay ground rent. You can't redeem ground rent on
- commercial properties
- properties with fewer than 50 years left on the lease
- National Trust properties
- certain flats
- properties purchased through Co-Ownership housing.
You have to pay fees to redeem your ground rent. These are
- 9 times your annual ground rent charge and
- a £50 administration fee
The Department of Finance website has the forms you need to redeem your ground rent and guidance to help with the process.
A solicitor has to witness some of the forms you need to complete. You can ask a solicitor to do the whole process for you, but this will cost extra.
Registering your freehold
You will get a certificate of redemption once you have bought out the ground rent. This certificate is part of the deeds to your property and should be placed with these deeds.
You can register this certificate with the Land Registry or Registry of Deeds if you want to register the freehold to the property. You have to pay a fee for this.