Master thesis - general questions about long leasehold system

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    Master thesis - general questions about long leasehold system

    Hello,

    my name is Juliane Kaebisch. I am a german student for Real Estate Valuation and I`m writing a master thesis on "International ground lease-systems”.

    The leasehold-system in england is very interesting and I have found a lot information. But there are still unanswered questions especially about the “long leasehold”.

    Could anybody answer my questions below? It would be very helpful for me.

    1. The conditions of a long leasehold are regulated in a lease agreement between the landlord and the lessee.
    But which provisions are mandatory under the law? And could you tell me which conditions are typical for a long lease agreement (especially for long leases of houses or commercial estates like offices).

    2. Where is the leasehold enter in the land registry (property register, proprietorship register or charges register)?

    3. What happened with the long leasehold in case of a foreclosure sale(compulsory auction)? Would it persist?

    4. What determines the ground rent? How high is it usually for an office building and a residential building? Is it usual to index the ground rent and which index is used for that?

    5. Is it usual to pay a compensation at the end of the lease?

    Thank you in advance!
    And sorry for my English

    Greetings Juliane

    #2
    1. Hardly any. Best way forwards: find someone (friend? colleague?) who lives in a local block of flats.
    2. Each ownership is individually registered under its own title number with at least Property Register and Proprietorship Register. A leasehold title is noted against the corresponding freehold reversionary title.
    3. Yes (unless the reversioner [L] is forfeiting it- extremely rarely happens in real life).
    4. 'What the market will bear'! If L intends to retain the f/r, the rent will be as great as possible- £250 to £300 is about the max. If L intends to pass it to the collective leaseholders or if L is owned by them, it might be a 'peppercorn' (= no money value; every lease has a rent of some sort, as that's a hallmark of leaseholds).
    5. No, but:
    a. long-leases virtually never expire, as T almost always extends the term well before then; and
    b. even if T does not, T has a right to remain resident: Local Government etc. Act 1989 (paying a market rent).

    Finally, your use of English is far better than:
    a. my use of German; and
    b. the majority of new LandlordZONE members. Well done!
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

    Comment


      #3
      As regards to question 1, you can view decisions of the LVT (Leasehold Valuation Tribunal) at http://www.lease-advice.org/lvtdecis...es.asp?table=2. This relates to clauses in leases which are under dispute, so it wont tell you what is in every lease, but if you read some of the decisions you will get a flavour of many of the clauses.

      As pointed out, leases really do vary from one to another, and some will be will be written in easy to understand english whereas others are written in bizarre 'legalese' and are very difficult to understand.

      Andy
      Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

      I do not accept any liability to you in relation to the advice given.

      It is always recommended you seek further advice from a solicitor or legal expert.

      Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

      Comment


        #4
        Jeffrey and Andydd, thank you so much for your answers!!!

        Just a last question:

        Is it common to link the ground rent to an index? If yes, which index is used for that?

        Thanks
        Juliane

        Comment


          #5
          Originally posted by jule612 View Post
          Jeffrey and Andydd, thank you so much for your answers!!!

          Just a last question:

          Is it common to link the ground rent to an index? If yes, which index is used for that?

          Thanks
          Juliane
          In modernleases yes usually RPI http://www.statistics.gov.uk/cci/nugget.asp?id=22

          In older leases, leaes that have been extended by negotiation or statutory extensions, as well as those for 999 years there may be no review at all.

          Often a 99 year lease was increased by a fixed amount every 33rd year, as with 125 yr leases when they became common place wth a review every 25th year. Most of these were granted in the 1970's to 1990's and therefore are still quite common.
          Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

          Comment


            #6
            There have been posters asking about their lease where it states something like ground rent is £10 doubling every 5 years which means that in 100 years it will be half a million quid or something ridiculous !
            Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

            I do not accept any liability to you in relation to the advice given.

            It is always recommended you seek further advice from a solicitor or legal expert.

            Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

            Comment


              #7
              hallo Juliane

              I hope you found Jeffrey's responses useful. In the English Real Estate sector "Long leasehold" tenure is very predominant in apartment buildings. Elsewhere in the world, I think, the condominium model prevails to a much greater extent.

              I believe the reason why the landlord and tenant relationship has persisted is that here it is easier to enforce what is called a negative covenant than a positive covenant.

              Essentially, the freeholder has stringent powers to forfeit the lease, however these can never be implemented provided the leaseholder behaves himself or herself and abides by the terms of the lease. Beyond simply paying an amount of rent, there are clauses covering repairing obligations, insurance obligations, an obligation to obtain prior landlords consent for alterations, and so forth.

              Sometimes the residents acquire the freehold, and in certain circumstances they have the right to do so compulsorily on payment of monetary compensation to the previous owner but still the landlord and tenant relationship exists.

              Essentially the landlords' reversion operates as a security or others in the block against anarchic conduct on behalf of a rogue leaseholder. Most residential leases granted after the early to mid 1960s contain a clause entitling a leaseholder to require the freeholder to enforce covenants against another leaseholder. This is called "mutual enforceability".

              The reason that commercial property is let under long lease, is, typically the landlord will want certainty that he can enforce covenants against the occupiers. So, for example, when the rail network sell off development rights close to or above railway line they will do so on a long lease, and reserve all sorts of rights in their favour. Typically, therefore, the long lease thereby granted will be called a headlease, and interests carved out of it, which will expire a few days before the headlease are called underleases.

              There can be a multi tiered succession of landlords and tenants with interests over elements of the same piece of ground !

              You ask about forfeiture. In the event of the landlord bringing litigation to terminate, say a headlease, for, let us say operating in breach of a permitted user clause, all those leaseholders whose title derive from the headlease would be dispossessed on the action succeeding , so in such cases leaseholders holding as underlessees or sub-underlessees are entitled to be joined in to the litigation. Forfeiture of the headlease is exceptionally rare as the Judges will bend over backwards in favour of a leaseholder and give them several opportunities to put their house in order.

              The Courts, if anything, in England have a marked bias in favour of the tenant; and perhaps you might say rightly so.

              In the lower civil court which is called the County Court, many of the Judges seem to visualise themselves as latterday versions of "Robin Hood", no so much for the attendant band of "Merry Men" but for their willingness to "rob from the rich and give to the poor"! I am sure you have heard of Robin Hood. And not just the recent film starring Russell Crowe in the lead role!

              Comment


                #8
                What is the German property system applied to flats and apartment where then owners have to contribute to maintenance of the communal areas ? I think the "leasehold tenure system" in Europe was swept away under Napoleon's rule some 200 years ago ?

                Comment


                  #9
                  Probably something like 'strata title' [Australia]/ 'condominium' [some USA states]
                  or even E&W's moribund 'commonhold' farce.
                  JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                  1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                  2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                  3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                  4. *- Contact info: click on my name (blue-highlight link).

                  Comment


                    #10
                    Thanks for the answers!!!

                    @Gordon999: Like Jeffrey said, in germany we use a system which is known in england as "commonhold".

                    greetings Juliane

                    Comment


                      #11
                      1. What is the german word for commonhold ? I would like to make a internet search .

                      2. When did commonhold title start in Germany ( both West and East Germany ?)

                      3. Do you have "licenced" managing agents to administer the service charge accounts ?

                      Comment

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