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A typical long lease is longer than a lifetime, maybe 99 or 120 years, but you could in principle write a shorter one of just a few decades, or a much longer one of hundreds of years. As I understand it the main residual value is from payment to renew leases (mortgage lenders don't want to lend against a home you may not have in a few decades, so it's often not possible to sell a lease to a "normal" buyer who wants a mortgage if it has say 50 years left on it, you'd pay to renew it), and from any "ground rent" owed by the leaseholders each year indefinitely. Historically ground rent was often set at a token amount, but of course there was an opportunity for greedy people to jack that up when creating a new leasehold property and so e.g. mine is £250 per annum. It doesn't feel like renting at all, it's just that historically English law provided no way to outright own 3D space, only 2D parcels of land can have freehold, and arguably in practice it wouldn't mean anything anyway. If I "owned" this space, but the building it is in burned down, how do I live here without re-building it? The freeholder is responsible for insuring the building (the certificate of insurance is posted on a notice board on the main entrance floor of my building near the weird art that presumably the owners or builders liked, and the elevator) and collecting a fair share of insurance premiums from all leaseholders, likewise they hire a maintenance company to sort the gardens, do elevator safety checks, resurface the parking, clear junk illegally left by ex-tenants (could they try to sue instead of billing the remaining tenants? Sure, but if a lawsuit costs £1000 and hiring a clearance firm costs £180 guess which gets done) and so on. Leaseholders can (are legally always entitled to) buy the freehold, but now you've got the headache you were paying somebody else to deal with. You (collectively) need to buy insurance, hire a maintenance firm, and so on or else pay to hire somebody to do that on behalf of everybody. For a shared building where I live (as opposed to standalone houses) this division of labour makes at least some sense and I'm not opposed to it continuing to exist. Creating more leasehold houses is crazy nonsense, but alas the present governing party really like rich people, and thus has not exactly prioritised banning such practices. |