Leasehold Vs Freehold

What is The Leasehold Vs Freehold?

Leasehold and freehold are two different types of property ownership in English law. A leasehold title refers to a situation where the owner of a property only has the right to use the property for a specified period of time, as outlined in the lease agreement.

This period of time is indicated on the Certificate of Lease, along with any associated rent or fees that the leaseholder must pay to the owner of the land or freeholder.

In contrast, freehold ownership means that the owner of the property also owns the land on which the property is built. This type of ownership is indicated on a Title Deed, which does not include a specified period of time or rent.

The key difference between leasehold and freehold ownership is the length of time that the owner has the right to use the property.

Leasehold ownership is generally associated with apartments or flats, where the owner of the building retains ownership of the land on which the building is built.

Freehold ownership is more commonly associated with houses, where the owner owns the land on which the house is built, as well as the property itself.

Potential buyers need to understand the type of ownership that comes with a property, as it can have an impact on their long-term investment and financial obligations.

For example, leasehold ownership may come with restrictions on alterations or maintenance of the property, as well as additional fees and charges to the freeholder.

Freehold ownership provides the owner with greater control over the property but also carries responsibilities for maintaining the land and any other associated costs.

Is Leasehold Better Than Freehold?

It is not accurate to say that leasehold is always better or worse than freehold ownership. Both types of ownership have their advantages and disadvantages, and what is best for a particular person depends on their individual circumstances and preferences.

One advantage of leasehold ownership is that leasehold properties can be cheaper than freehold properties, although this is often due to the risks involved.

For example, the leaseholder may be responsible for paying ground rent, maintenance fees, and other charges, and the cost of extending a lease or purchasing the freehold can be high.

On the other hand, freehold ownership provides the owner with more control over the property and greater flexibility to make changes or improvements.

The freeholder is responsible for managing maintenance for the building and communal areas, which can relieve some of the burdens on the property owner.

Additionally, freehold properties generally have no restrictions on alterations or use of the property, which can be a significant advantage for those looking to make changes or renovations.

Ultimately, the choice between leasehold and freehold ownership depends on the individual’s circumstances and priorities. It is important to carefully consider the costs and benefits of each type of ownership before making a decision.

How Do I Change My Leasehold To Freehold In Kenya?

To change a leasehold property to a freehold in Kenya, the following steps must be taken:

  1. Obtain the necessary forms: The applicant must obtain and complete Forms 4, 5, 10, 19 & 23 in duplicate. These forms can be obtained from the Ministry of Lands.
  2. Prepare the required documents: The applicant must have a set of three authentic deed plans, a duplicate certificate of title, three passport photographs, and receipts of payment.
  3. Prepare a forwarding letter: The applicant must prepare a forwarding letter requesting the conversion from leasehold to freehold title. The letter must be signed by the District.
  4. Apply: The completed forms, documents, and forwarding letter must be submitted to the Ministry of Lands. The application must be accompanied by the appropriate fees.
  5. Wait for approval: The Ministry of Lands will review the application and may request additional information or documentation. If the application is approved, the Ministry will issue a new freehold title.

It is important to note that the process of converting a leasehold property to a freehold can be complex and time-consuming, and may involve significant costs. It is therefore advisable to seek professional legal and financial advice before embarking on this process.

What Happens After A Leasehold Expires In Kenya?

In Kenya, when a leasehold expires, the lessee may be required to apply for a renewal of the lease. This process typically involves applying with the Land Commission, which must be done by the registered owner of the expired lease or an appointed administrator.

If the Land Commission does not provide prior notice to the lessee, the lessee may not be aware that their lease is expiring, which could result in complications.

Therefore, lessees need to keep track of their lease agreements and ensure that they are aware of any renewal deadlines or requirements.

Once a renewal application has been lodged with the Land Commission, the Commission will consider the application and may grant a renewal of the lease.

The terms and conditions of the renewal will be determined by the Commission and may include changes to the rent, the length of the lease, or other aspects of the agreement.

It is important to note that failure to renew a leasehold in Kenya could result in the land reverting to the government or other landowners, which could have significant implications for the lessee’s rights and obligations.

Therefore, it is essential for lessees to stay informed about the renewal process and to take action to renew their leaseholds in a timely manner.

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