Leasehold

Leasehold is a form of property tenure in which a person obtains the right to occupy and use land or buildings for a defined period under a lease from the owner, who retains ownership of the land or building (the freeholder). In contrast, freehold means ownership of the land and buildings outright for an indefinite period. Leasehold arrangements are common for flats and some houses, particularly in the United Kingdom and other Commonwealth countries.

A lease sets out the term, rent, and a set of covenants governing both parties. The tenant’s obligations typically include paying rent and service charges, maintaining the property, and complying with restrictions on alterations, subletting, and assignment. The landlord’s covenants often cover insuring the building and funding major structural repairs, sometimes via service charges for shared areas.

Term length is a key feature: leases can run for 40, 99, 125 years or more. As the remaining term shortens, property value, mortgageability, and the cost of extending the lease may change. Rent can include a ground rent in some jurisdictions, and many leases allow periodic increases. Leaseholders may have rights to renew or extend the lease under statutory schemes, and, in some places, collective enfranchisement of the freehold by the leaseholders.

Transfer and termination involve assignment or subletting with consent, and, at expiry, the property reverts to the freeholder unless the lease is extended or renewed. Leasehold reform and related rights to manage or extend are common topics in property law discussions.