Leasehold is an occupation of a site for a term of years, a fixed annual payment being met each year for the privilege of occupying the land. Naturally, a leasehold house should be cheaper than a freehold.
In dealing with leasehold property, the buyer should exercise care. A lease of the land is usually granted for a term of ninety-nine years; the number of years the house has been standing must be deducted from the full lease to give the length of time remaining to the purchaser. In practice, it is often a few years short of the full period, because there may be an interval between the granting of the lease and the erection of the house.
Leasehold property becomes a doubtful proposition when a house has been in existence more than fifty years.
The ground landlord has powers which seriously affect leaseholders of short-termed property. He may demand, when a lease expires, that the property be handed to him in a habitable and reasonable condition. lie cannot require fresh wall-paper, nor clean ceilings and other minor renovations; but he can enforce structural repairs, if they are needed to make the property habitable and weather-tight.
In practice it will be found, when a house has no more than ten years to run before it reverts to the ground landlord, that this latter person usually becomes very active. He will inspect the property from time to time to see that everything is in order, so that when the lease expires he is presented with a house in sound condition.
All things considered, short-termed leaseholds should not be entertained, since they may prove to be veritable millstones round the neck. Long-termed leases, however, for the man of limited capital offer positive advantages. The price is less than for freehold, and the restrictions are more numerous. This may seem in the nature of a contradiction, but it is not. It may be assumed that the holder of a leasehold is surrounded by others on leasehold tenure. Each will be required to conform to the rules laid down by the ground-landlord in the agreements. These will require a certain stan- dard of upkeep, which will help to maintain the immediate neighbourhood at a suitable level. There is less chance of the property deteriorating in value because of neglectful neighbours.
One more remark about leasehold property. Before buying, the annual charge for ground rent shou Id be considered. A high ground rent spoils the chances of selling the house profitably at any future date, whilst a low one enables a better price to be obtained .