Property law in England

Property law in England

The procedure for home ownership is very different from the one we know in France. England has no equivalent to our notarial system. About 95% of sales are made by solicitors (customary lawyers practising private deed writing) and the rest by Licensed Conveyancers (real estate lawyers authorized to make sales). Sales are made in the form of a contract and not a deed of sale as we have in France and the formalism is much more flexible, in England, the notion of ownership is different from the one we know on the continent.

house in Birmingham

It is necessary to distinguish between the FREEHOLD ESTATE which corresponds to free and perpetual property and the LEASEHOLD ESTATE which corresponds to free but temporary property.

These two terms describe an important difference in defining ownership in England. They come directly from the history of England. At the time, the King was the sole owner of all the land. The majority of houses are sold in Freehold and the majority of apartments are sold in Leasehold.

The Freehold Estate

There are several types of Freehold but only one is generally applied, the others having fallen into disuse. By definition, this right is supposed to be the most absolute, corresponding to the ownership of the building and the land on which it is built; Freehold is a perpetual right unlike leasehold. It will only end if there are no more heirs and no wills have been considered. The property will then be returned to the Crown. The holder of the Freehole Estate is registered as a landowner in the land registry.

Since 1993, Leasehold owners have been able to buy back the Freehold among themselves, which explains why more and more apartments are being acquired with part of the Freehold. If the owner of Freehold wants to sell, he must give the Leasehold owner the choice to buy first.

The Leasehold Estate

It is a method of ownership of property in England recognized since the Law of Property Act of 1925. Leasehold is a right inferior to that granted by Freehold and is a right of full ownership recognized as absolute but granted for a fixed period of time, the rights of possession enjoyed by the holder of Leasehole are more limited than those enjoyed by the owner of the property in Freehole.

Three characteristic elements are essential to define a Leasehole.

– A fixed duration: The maximum duration must be set when the Leasehold is granted. A departure date for the lease must also be indicated. Leasehold can be fixed-term (it is granted for a fixed period of time) or periodic (it is fixed for a fixed period of time, for example weekly, monthly, annual… and is renewable with a fixed notice period. It is this period of notice that defines the duration of the Leasehold). It is possible for a Leasehold owner to sell his right at any time, and when acquiring a Leasehold, the remaining term of the lease must be taken into account. If there are less than 50 years left, it will be difficult to find a loan (75 years being the minimum term to consider).

Exclusive ownership: This is the possibility of excluding anyone from ownership, including the owner of Freehold. It is possible for a Leasehold holder to mortgage his property and rent it (No clause can prohibit rental).

An annuity to be paid: An annuity is generally payable to the holder of the Leasehold. The terms must be established at the time the Leasehole is set. Generally, the Leaseholder must also pay an annual service to the Freeholder to cover the maintenance and repairs of the building and/or common areas where applicable.

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