Property sales are either on a leasehold or freehold basis. When you buy a freehold property you own the property and the land it sits on. If your property is a leasehold property you’ll have to pay an annual charge, known as ground rent, to the person who owns the freehold.
The solicitor who helped you purchase the property will be able to explain if the property is a leasehold or freehold property.
Apartment buildings are often sold as leaseholds. The term of the lease can be anything between 99 and 999 years and when you buy the property you buy the right to live there for the duration of the lease.
The freeholder and the lease
The freeholder is the person who owns the land that your property sits on. This could be an individual or a company. The freeholder can sell the freehold to another person or company. You have a right to know who owns the freehold of your property.
The lease is the legal contract between you and the freeholder. When you’re buying a property it’s important that you have your solicitor examine the lease agreement to find out
- who the freeholder is
- if there are any specific terms which you have to agree with
- whether you need the freeholder’s permission to do certain things with the property
- how much your annual ground rent will be.
Your solicitor should also ask for confirmation that the ground rent account is up to date. Any problems with the lease need to be sorted out before the sale completes.
Leasehold law in Northern Ireland
There isn't much really any legislation in Northern Ireland setting out the rights of leaseholders or explaining how leaseholders can raise complaints about their management companies. Instead, the rules for what your lease does and doesn't allow you to do will be set out in your own contract. If you are thinking about buying a leasehold property, it is really important to go over the contract carefully before you sign it and to make sure that you understand what you can do if you have concerns about your management company.
Because every lease is different it will be very difficult to get free advice about your rights if you have a leasehold dispute and you will probably need to hire a solicitor to help you.
You will normally have to pay ground rent to your freeholder. This will be an annual charge. The lease should say when and how this charge can be increased. If you don’t pay your ground rent, the freeholder can take you to court to get a court order requiring you to pay what is owed.
You might also have to pay a service charge on top of the ground rent, particularly if you live in a communal apartment block. At the moment there is no regulation of service charges in Northern Ireland. If you have a problem with the company that you pay the service charge to you should speak to a solicitor.
Expiry of a lease and eviction
The freeholder doesn’t have to renew your lease if it expires but you should ask for this to happen. Without a valid lease you’ll have no right to remain on the land, even though you own the property.
Your freeholder can only evict you from the land with a court order. If you’ve received an eviction notice from your freeholder contact the solicitor who helped you with the purchase.
Buying the freehold
Some leaseholders can redeem their ground rent and basically buy out the freeholder. While most leaseholders can do this, there are some restrictions, including
- commercial properties
- properties where there are fewer than 50 years left on the lease
- National Trust properties
- certain flats
- properties purchased through Co-Ownership housing.
You should speak to a solicitor to find out more about redeeming your ground rent. You can get the forms that you will need to redeem your ground rent from the Department of Finance and Personnel website. You’ll need to make sure your ground rent account is up to date and you’ll have to pay a fee. The fee is 9 times your annual ground rent charge. You’ll have to pay an administration fee on top of this.