Leasehold
Leasehold is a form of property ownership where you hold a property for a fixed term under a lease, while another party, the freeholder or superior landlord, owns the land and overall structure. If you sublet a leasehold flat, you are both a tenant of the freeholder and a landlord to your residential tenants, often making you a mesne landlord within the Private Rented Sector (PRS).
The lease usually sets out the term, any ground rent, increasingly reduced to a peppercorn rent on new leases, and your obligations to pay service charges, contribute to capital improvements, follow building rules and allow property inspections. Breaching these covenants can lead to enforcement action by the freeholder, including in extreme cases forfeiture.
When you let a leasehold property on an assured tenancy, all normal Renters’ Rights Act duties apply, including rental standards, fit for human habitation, Awaab’s Law duties on damp and mould, energy efficiency rules (including MEES and higher rate efficiency standards (HRAD)), and the regimes on permitted payments, tenancy deposits, the Private Rented Sector Ombudsman and PRS Database.
Professional leasehold landlords keep on top of both layers. Complying with the headlease and freeholder requirements, while also running fully compliant private tenancies for their own tenants.
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