What happens to a flat when the lease runs out?

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Simonthegreat
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#1
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#1
I was just wondering that if you bought a flat and then the lease ran out what happens? If the lease is not renewed by the freeholder for whatever reason what is happens then ?
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Reality Check
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#2
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(Original post by Simonthegreat)
I was just wondering that if you bought a flat and then the lease ran out what happens? If the lease is not renewed by the freeholder for whatever reason what is happens then ?
This seems a bit confused. Leasehold is basically a long tenancy - the lesee never owns the property - it remains in the ownership of the freeholder. When the lease runs out, ownership doesn't 'transfer' to the freeholder, because he never lost it. If the freeholder doesn't offer the lesee a new lease, then that's that: ownership and possession revert to the freeholder.
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NX172
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#3
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You should never really get into this situation and you'll find it extremely difficult to mortgage a property with fewer than 70 years left on its lease anyway. A lease, much like a tenancy, simply gives you the right to occupy the land, be able to pay low ground rent and enjoy the property without disruption from the freeholder/landlord. Thus, when the lease runs out, the landlord regains full possession of the property.

One should be careful of the 80 year trap on leases, as when the lease's unexpired term drops below 80 years, any lease renewal will be subject to an additional 'marriage fee' which is equal to half the increase in the property's value due to the lease extension.
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Simonthegreat
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Thanks. So why would anyone bother buying a lease hold property if they are never going to actually own it? Also, can you expand a bit more about renewing the lease and how the cost is calculated? Are you able to leave a leasehold property to someone in your will?
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#5
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(Original post by Simonthegreat)
Thanks. So why would anyone bother buying a lease hold property if they are never going to actually own it? Also, can you expand a bit more about renewing the lease and how the cost is calculated? Are you able to leave a leasehold property to someone in your will?
I'll take your points in turn:

Personally, I would not bother with leasehold for precisely the reasons you say - you never own the property and cannot pass it down to your heirs. In the vast majority of cases, freehold is always better. However, a lot of flats in London and other cities are leasehold, so sometimes if you particularly want to live somewhere you don't have an option. Even though leases are often 90 or 120 years, there are are plenty which are for 999 years, which means in practice there is little difference between leasehold and freehold for the current tenant.

Renewing the lease - this is a complicated area of law. Basically, if your lease has 21 years or more left to run, and you've been the leaseholder for two years or more, you have a right to extend it for a further 90 years for a flat or 50 years for a house. The valuation of this lease (i.e the amount you have to pay for it) depends on many factors and some negotiation between the you and the landlord. More information about this complicated area can be found here

Inheritance - as leasehold is a form of tenancy, the leaseholder never actually owns the property (it is owned by the freeholder). Consequently, there is nothing to leave in a will. The possession reverts to the freeholder upon the death of the leaseholder.

.
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(Original post by NX172)
A lease, much like a tenancy, simply gives you the right to occupy the land, be able to pay low ground rent and enjoy the property without disruption from the freeholder/landlord. Thus, when the lease runs out, the landlord regains full possession of the property.
This is incorrect. Upon expiry of the lease, the landlord does not regain full possession. Quite the contrary. The tenant continues his possession of the property. If the freeholder wanted to regain it, he would have to serve a statutory notice and get a court order.

http://www.lease-advice.org/faq/what...ease-runs-out/
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ddrrzzeerr
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#7
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You can buy the freehold or extend the lease. If you can't decide a price with the freeholder, a court or tribunal will.
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ddrrzzeerr
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#8
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(Original post by Reality Check)
Inheritance - as leasehold is a form of tenancy, the leaseholder never actually owns the property (it is owned by the freeholder). Consequently, there is nothing to leave in a will. The possession reverts to the freeholder upon the death of the leaseholder.
.
You can leave a lease in your will. They may not own the freehold but they own the lease. That can be passed on like any other asset.
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#9
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(Original post by Sternumator)
You can leave a lease in your will. They may not own the freehold but they own the lease. That can be passed on like any other asset.
The point I was making is that possession does not automatically revert to the freeholder upon the death of the leaseholder, and you do not inherit the property because you don't own it, but you're right to point out that the lease can be inherited.
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