Wankim Investments primarily looks to sell property on a freehold basis, by transferring ownership, giving our clients exclusive and unlimited rights to the property. We however find it necessary to bring the other land ownership method (leasehold) to the attention of our clients and provide an insight into the characteristics of

land ownership for prospective property owners.

Leasehold

Under this arrangement, the lessee has ownership of a temporary right to hold land or property by some form of title from a landlord. During the duration of the agreement, the tenant can consider the property as personal property. Typical characteristics of this leasehold land include;

• Land owned by government or a land owner then leased for a fixed period of time
• Rent is normally in annual installments
• Property asking price is normally lower
• The rent is based on a percentage of the freehold value
• Rates still have to be paid, as well as maintenance and insurance
• Fixed rent can be for a lengthy period, 7-21 years
• The landlord can increase rent
• It is important for the tenant and representatives to carefully view the lease agreement

Under the leasehold land, you may own any improvements and development on the property, for instance a building or structure built on it.

Freehold

Unlike leasehold, this is ownership of real property including land and all moveable structures attached to such land. For an estate to be a freehold it must possess two qualities: immobility (property must be land or some interest issuing out of or annexed to land); and ownership of it must be of an indeterminate duration. If the time of ownership can be fixed and determined, then it cannot be a freehold. Main characteristics of freehold land include:

• Owner has no conditions on the use of the land
• They may be restrictions according to by-laws
• Exclusive rights to the land for an indefinite period
• Owner may sell or lease land to whoever
• If granted by government, it keeps a right to buy it back

Leasehold Vs Freehold

• Fees are a major source of contention in land ownership. While leaseholders have to worry about fees to be paid at agreed intervals, freeholders can do not. In many cases, leaseholders often have the feeling that their landlords are overcharging them, but can do little about it.
• Maintenance of property also gathers a considerable amount of conflict between freeholders and leaseholders, especially in relation to terms and conditions of contracts. Landlords would in many cases increase the initially agreed fees at some point in the agreement without improving the state of the property. Some leaseholders also contribute to the decline of the state of freeholders’ property.
• Leaseholds decline in value as the term of agreement runs down to zero. At this point the property reverts back to the freeholder.

Why you should avoid short leaseholds

Leases that have a short duration should be looked at carefully due to significance it has on the value on the property. Even with the value of property in the area increasing, your property will still decline in value pushing away potential buyers and mortgage companies.

Protection

A series of government acts have given land owners protection against common malpractices, especially leaseholders with short leases.