Understanding Leasehold Property and Its Benefits

A leasehold property is a building or a piece of land that is purchased by an individual for a predetermined amount of time. The person that occupies the property is known as the "lessee or tenant". The owner of the property is the "lessor or landlord".

The tenant purchases the right to occupy the property for a given length of time from the landlord. Leasehold differs from a tenancy because the leasehold agreement is usually for a very long period of time, usually anywhere from 5 years to more than 25 years. On the other hand, a tenancy is usually based on a monthly, or weekly basis. 

Renewal Terms

When renewing a leasehold, it is usually for at least 5 years. The longer the lease term, the more the property increases in value. It is wise to purchase a leasehold property with some time left on the lease. Most banks will not finance a leasehold property without a significant amount of time left on the lease. During the time of the lease, the tenant is responsible for paying an agreed upon rent to the owner for maintenance. The terms of the leasehold agreement that are contained in a lease are elements of property and contract law. 

BENEFITS OF A LEASEHOLD PROPERTY

One benefit of a tenancy in a leasehold property is knowing that the property does not have to be returned quickly. The resident of a leasehold property does not have the right to make any substantial changes to the property without the landlord's consent. The landlord has legal ownership to the structural and is also responsible for any significant repairs. Owning a leasehold property does not prevent an owner from selling the property. The leasehold property can be bought, and sold, several times without affecting the tenant's leaseholder agreement. When the new owner purchases the leasehold property, the seller must present the new owner with the leasehold agreement. Also, residing in a leasehold property can be a viable option for those who would like access to a property over a long period of time, while someone else tends to the maintenance of the property.

SOME EXAMPLES OF LEASEHOLDER PROPERTIES

Leasehold properties are very popular in the UK where residents own their flats or apartments. The leaseholder of a flat signs on for a long tenancy. At the end of the leaseholder agreement the flat, is returned to the owner of the building or a new lease can be worked out. Purchasing a leasehold property can also be useful to investors when purchasing property in countries that do not allow foreigners to purchase property. Foreign investors may enter into leaseholder agreements and sublet the property.

Ref : www.loan.com