Freehold & Leasehold Shop

[OIC]

Probably the wrong forum so apologies in advance.

I've seen a shop which has a 999 year lease but appears to still be owned by a freeholder.

What does the freeholder get out of this arrangement (which may be very common - I don't know)?

Can he chuck the leaseholder out if he wants to?

Can he sell the freehold of the shop separately, with or without including the leasehold?

Does he have a say in buildings alterations or repairs?

I can understand a 3, 6, 9 year lease, but 999 years?

Final question - would a copy of the lease be registered with the Land Registry?

I'd like to take a look at the details.

[AndyNetwork]

1.

OIC said:

What does the freeholder get out of this arrangement (which may be very common - I don't know)?

Money - You as the leaseholder have to pay the freeholder money for having a building on their land

2.

OIC said:

Can he chuck the leaseholder out if he wants to?

In theory, yes, but they would be in breach of the lease agreement, hence it being better to have a long lease, like 999 years.

3.

OIC said:

Can he sell the freehold of the shop separately, with or without including the leasehold?

Yes, it's the land he will be selling.

4.

OIC said:

Does he have a say in buildings alterations or repairs?

Alterations, yes, repairs not so much. I had to get permission from the freeholder to add an extension to my house.

5.

OIC said:

I can understand a 3, 6, 9 year lease, but 999 years?

The longer the lease, the less likely the freeholder is to want to take the land back and kick your building off their land. (See point 2 above)

6.

OIC said:

Final question - would a copy of the lease be registered with the Land Registry?

It maybe - I checked the land registry for my house, and the actual lease wasn't there, but the freeholder details were, and the length of the lease, and when it was granted. In my case, there is still 930+ years to go.

[trevalvole]

OIC said:

Final question - would a copy of the lease be registered with the Land Registry?

A copy of the lease is more likely to be registered with Land Registry if the last change of leaseholder was in the past decade or two.

[megaphone]

Is there a flat above? If so it may be on a separate lease.

[Jeremy-75qq8]

999 year leases are often described as virtual freehold.

The lease will likely be there as it has to be. As above a block with flats above is highly likely. The shop is sold and the freeholder retains the flat ( or Leases it or whatever ).

[Castrol for a knave]

Jeremy-75qq8 said:

999 year leases are often described as virtual freehold.

The lease will likely be there as it has to be. As above a block with flats above is highly likely. The shop is sold and the freeholder retains the flat ( or Leases it or whatever ).

This.

In many locations it is not unusual that all the nearby properties are long leasehold - most of London's West End sits on long leases from Westminster, Cadogan or Grosvenor.

The devil is in the detail, but ultimately, unless you use the place as a brothel or allow it to fall into disrepair, the landlord is hard pushed to turf you out.

A long leasehold is often used where multiple separate property interests sit on one site - easier for a management and also value perspective. It's also common if the land is owned buy a statutory undertaker or authority, such as a council, government agency such as Environment Agency or often, a historic trust.

If is it is a perppercorn or Market Rent, for a term of 999 years and there are no break clauses in favour of the landlord, then most lenders will view it as the virtual freehold as the poster above correctly states.

Where you do need to take advice, is in respect of repairing liabilities. Inherent defects in a property are not necessarily the landlord's liability (Ravenseft v Davstone). It can fall to the tenant, so I would be at least taking legal advice in respect of that, though if we are talking a small commercial unit with a flat above - you'll probably take a commercial view on what such liability could be.