When one owns a leasehold interest in a property it means that one owns the building and not the land upon which it is situated and that the ownership is for a fixed number of years.
If you own a leasehold property, you must pay ground rent to your ground landlord – the person who owns the ground it is built on.
The amount of ground rent paid varies. Often, the ground landlord is the local authority.
In many situations, the ground rent is neither demanded nor paid. In lots of cases, people do not even know who is entitled to the ground rent.
Owning the freehold interest in a property means that one owns the land and buildings (if any) outright; there is no period of years attached to the ownership, and there is no ground rent to pay.
Ground rent is a regular payment made by a holder of a leasehold property to the freeholder or the superior leaseholder as required under a lease.
There is still sometimes a misconception among people that freehold is better than leasehold when selling, but a long lease is a perfectly good title and there is no need to acquire the freehold.
However, as in your case, there are many leases in existence which have less than 70 years to run, so people should check. Less than 70 years to run is not considered good, marketable title.
When you are buying or selling a property, any ground rent will be recorded on the previous deeds (if the property is registered with the Registry of Deeds) or on the folio (if the property is registered with the Land Registry).
As your lease is running out, it is important to take steps to acquire the freehold now. These procedures are straightforward.
Buying out the ground rent means that people can more easily sell, mortgage or develop their property.
People should know, too, that they can approach their landlord/builder at any time and buy out the ground rent by agreement.
The Land Registry’s Ground Rents Purchase Scheme allows leasehold owners to buy out their ground rent and become outright owners of their property.
The amount to be paid when buying out the ground rent can either be agreed between you and the ground landlord (consent procedure) or else obtained through an arbitration procedure.
The amount of ground rent is set by the arbitration procedure if you are buying it out under the Ground Rents Purchase Scheme and you cannot agree on the amount with the ground landlord.
If you buy out your ground rent, whether from a private landlord or a local authority, the PRA will issue a Vesting Certificate.
The Vesting Certificate is a new title deed to your property. It is a very important document.
You are strongly advised to have it registered with the Land Registry or the Registry of Deeds, as appropriate, to record the fact that you acquired the freehold to your property.
As your title has less than 70 years left to run on your lease you should take steps to obtain the freehold as soon as possible and you should engage a solicitor to assist you in the process. You will then have a freehold title which will be much more attractive to a purchaser.
Even if you change your mind about selling you should still perfect your title to your property.