Leasehold & Freehold

Posted on: 2014-02-21

Differences





LEASEHOLD FREEHOLD
LAND USES * Lease duration is
usually 30,
60, 99 or 999 years.
* Limited by purpose of lease
and land legislation.
* Stocking levels, cultivation
etc. may be restricted by
lease conditions.
* Limited by environmental
and town planning controls.
Limited by environmental
and town planning
controls.
DUTY OF CARE * High level of duty of care
defined in land legislation.
* May be responsible
for developing and
maintaining improvements.
* May be required to engage
in property planning.
Duty of care following
common law and as
required by some
Environmental Protection
Acts or its equivalent.
TRANSFERABILITY * Lease transfers require State
or its equivalent's approval.
* Aggregation
* and sub-division
* Fewer limitations
on transfer.
* Aggregation and unlimited
right to sub-divide and
aggregate subject to town
planning controls.
* Sub-division
RETRIEVAL/
RESUMPTION
Powers to acquire leasehold
interest or withhold land
when lease expires.
Some powers to acquire
land for public works.
SECURITY OF
TENURE
Varies according to lease
type but forfeiture for
non-performance may
be possible.
Very high level of security.

Advantages & Disadvantages





LEASEHOLD FREEHOLD
Advantages * Smaller initial outlay.
* Less financial exposure than a
freehold acquisition.
* Rent and any service charge is a business
expense spread over the lease term.
* You own the property outright
* You can use the property as you wish,
subject only to any planning or other
legal restrictions
* You have greater control over the
management of the property, e.g you
choose when to carry out works of repair
or decoration
* Property may rise in value.
Disadvantages * The lease will usually contain restrictions
as to the use of the premises, allowing
other parties to use the premises etc.
* Unless there is a break option, you are
bound to comply with the lease
obligations for the duration of the term.
* Even if you find another party to take
over the lease, you will probably be
required to stand as guarantor.
* A property with poor, limited or no
financial history will find it difficult to
obtain commercial mortgages.
* Cash flow will be affected by the payment
of any deposit.
* Mortgage costs may increase in line with
any rise in bank base rates.

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Source From: The Sun Newspaper Article@011113

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