Basic Information
1. Leasehold ‘Ownership’
Lawyers refer to leasehold as a 'legal fiction’.
The legal fiction is this: that it is possible to separate ‘ownership’ of a building and ownership of the land on which it is built .
Physically we cannot separate them. On paper however they can actually be sold to different people.
The freeholder buys the land. The leaseholder only buys a lease in part of the building erected on it. Because it is the freeholder's building, they have the power to:
-engage experts, and charge the leaseholder
-decide on contractors, and charge the leaseholder
-fix administration fees, and charge the leaseholder -engage a managing agent, and charge the leaseholder
The system is extraordinary, but once it is acknowledged that the building does NOT actually belong to the leaseholder, only the lease belongs to the leaseholder - hence the name ‘leaseholder’- the legal position is then established.
Since 1954 there have been no fewer than sixteen Acts of Parliament attempting to regulate the residential long leasehold system. The seventeenth Act, the latest, is the 2002 Commonhold and Leasehold Reform Act.
We now have more problems than ever with leasehold because these Acts have not fundamentally changed the relationship of the parties. They have attempted to regulate and control the consequences.
