When you buy a property, what you are buying, in legal terms, is the title to the property – you are buying a set of legal rights (and responsibilities) with regard to the property. Whatever you’re buying, you should make sure you know what type of title it is that you’ll own for future reference, so that you know exactly where you stand in terms of the law.
Normally when we think of owning property, we think of owning a building, for example a house, together with the area of land that it sits in – this type of ownership will normally involve a Freehold title. In this case, you own that property until you choose to give it up, and are entitled to do more or less anything you want to it, as long as that’s within planning laws etc.
When you buy a flat however, it will typically be a Leasehold title that you are purchasing, as the flat is a part of a larger building, that is in turn owned by someone else.
Naturally, when you own a flat, you do not own the building or land in which it sits, and therefore what you are actually buying, is the right to occupy it for a period of time. Your lease will also grant you whatever access you need to use and maintain the flat, which will generally of course involve access to the containing building and land.
Your own particular lease will detail the length of time that you have bought the right to remain in the property for, which will generally be around 99 years or more.
Your lease will also require you to fulfil certain responsibilities with regard to the containing property, for example service costs for maintaining the overall building in which your flat sits. In some cases you may be required to pay ground rent for the building’s land itself.
There are also restrictions on what you can do to a property that you own a Leasehold title on, for example you cannot make structural changes to the building, although you will generally be required to carry out essential maintenance on it.
When you own property, the Land Registry records the details of the title that you hold with regard to that property. This applies to Leasehold titles as well as Freehold. With Leasehold properties, there are two different types of title that the Land Registry recognises: absolute and good.
Which type of title you can get will depend on the title that stands for the containing building, and on who has granted the lease to you as leaseholder. The title is a reflection of the registered status of the building as a whole, and the entitlement of the landlord to grant you your lease.
If the title that the landlord holds for the overall building is registered as a Freehold title at the Land Registry, they will then be in a position to verify that the landlord was entitled to grant you the lease, and can therefore issue you an Absolute Title for your Leasehold.
If however, the owner of the containing property does not hold a Freehold title registered by the Land Registry, they may instead grant you a restricted title: a Good Leasehold.
The reason for this is that, as the overall property is not registered with them as a Freehold title, they cannot guarantee that the landlord has the right to issue you with the lease title.
In practice, the rights granted to you on the basis of a Good Title should be unproblematic unless there turns out to be any problem with the landlord’s own title.
The different types of title are therefore mostly a reflection on how the Land Registry regards the title for the overall property, although naturally this can have an effect on your rights to your own Leasehold situation.
In reality, the use of Good Leasehold titles has been caused by a historical lack of people registering Freehold titles on their properties. In the past only having a Good title tended to be a problem when it came to getting a mortgage on a flat, as you were required to hold a Title Absolute, but today this is seldom an issue.
What happens in practice is that the solicitors responsible for the conveyancing processes that happen when you buy and sell property have to do a little extra work to demonstrate your rights to the property, where you only have a Good Leasehold title rather than Title Absolute, but this is typically sufficient for the purposes of securing a mortgage.
Ask your legal question using the box below and have a response from solicitor or barrister within minutes.