What Does Tenure Mean In Property?

Tenure refers to the legal right to occupy or use a property or land for a period of time. It defines the relationship between the owner and occupier of a property and stipulates the conditions surrounding that occupancy.

Understanding tenure is critical when buying, selling, or occupying a property in the UK. The three main types of tenure are:

• Freehold
• Leasehold
• Commonhold

Each tenure comes with different rights, responsibilities, restrictions and costs associated with it. Read on for an in-depth guide on what tenure means and the key features of each type.

Freehold Tenure

Freehold means outright and indefinite ownership of a property and the land it stands on. As a freeholder you have full control over your property within the confines of the law.

Some key features of freehold tenure include:

• No time limit on how long you can own the property for
• Full control over alterations, extensions, and usage of the property
• No ground rent or service charges to pay
• Easier to obtain mortgage financing
• Responsibility for all maintenance and repair costs
• Can be sold or passed on without any restrictions

Pros of Freehold Tenure

• Complete ownership and control
• Asset likely to increase in value over time
• No ongoing costs besides utilities and council tax
• Full rights to make changes or rebuild if desired
• Can rent out without requiring permission

Cons of Freehold Tenure

• Full liability for all maintenance and repairs
• Responsible for building insurance
• Generally more expensive to purchase than leasehold

Freehold tenure is generally considered the most desirable type of tenure in the UK.

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Leasehold Tenure

With leasehold tenure you essentially rent or lease the property from the freeholder for a fixed period of time. The freeholder still retains ownership of the actual land itself.

Typical features of leasehold include:

• Fixed length lease ranging from 99 to 999 years
• Pay ground rent + service charges to freeholder
• Restrictions on alterations and usage
• Obligations around maintenance and repairs
• Requires permission from freeholder for changes

Pros of Leasehold Tenure

• Cheaper to buy than equivalent freehold property
• Shared responsibilities for maintenance of common areas

Cons of Leasehold Tenure

• Don’t own land outright, rights only for lease period
• Lease terms can be restrictive
• Additional ongoing costs like ground rent and service charges
• Changes or improvements require freeholder approval
• Selling can be more complicated with shorter leases

Leasehold properties are most common with flats, apartments and retirement properties in the UK.

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Commonhold Tenure

Commonhold tenure applies to multi-unit developments like apartments where residents jointly own common areas. Individuals own their own apartment unit leasehold, and jointly own communal amenities through a commonhold association.

Features of commonhold tenure include:

• Individual leasehold over apartment unit
• Shared freehold ownership via association
• Joint responsibility for maintenance of common areas
• Pay service charges to association
• Democratic rights on management decisions

Pros of Commonhold Tenure

• Individual control over own unit interior
• Shared costs for upkeep of communal amenities
• Involvement in decisions affecting building

Cons of Commonhold Tenure

• Still pay ground rent and service charges
• Collective responsibility for costs and maintenance
• Major works require group cooperation
• Selling unit may require association approval

Commonhold tenure gives apartment owners more control than regular leasehold. But it also comes with collective obligations around management and costs.

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Which Tenure Is Best?

There is no definitively “best” tenure type. The optimal tenure depends significantly on your personal circumstances and priorities as a home owner or property buyer.

Key factors to consider include:

• Intended length of occupancy – leasehold suits shorter stays, freehold for long term
• Costs – leasehold likely cheaper to buy, freehold avoids ongoing charges
• Control desired over property – freehold offers most flexibility
• Whether shared ownership suits your situation for flats/apartments

In most cases professionals recommend freehold tenure if possible, for complete ownership and control.

However leasehold or commonhold may suit if looking for cheaper entry price, happy with restrictions, or purchasing a flat.

It’s critical to understand the implications of tenure prior to buying a property. Be sure to carefully review lease terms or seek legal advice regarding your rights and responsibilities.

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Conclusion

• Tenure refers to the legal conditions governing occupancy and use of a property
• Main types are freehold, leasehold, and commonhold
• Each tenure has pros and cons to weigh up
• Tenure affects rights, costs, control and saleability
• Vital to understand tenure implications before buying property

Hopefully this guide has helped explain the key features and differences between freehold, leasehold and commonhold tenure. Be sure to get professional advice to ensure you fully understand the tenure terms when purchasing or occupying any property.