Understanding Freehold and Leasehold
There are three ways you can own your property: freehold, leasehold or with a share of the freehold.
A freeholder owns the property outright, plus the land it occupies. There’s no lease to run out, no dealing with a landlord and no need to pay ground rent, service charges or any other fees.
Leasehold means you own the right to occupy a property for a fixed number of years, typically 99 years or more. It is a type of long-term tenancy, it is not the same as outright ownership.
If the property you are interested in is leasehold, this means you, as the buyer (the ‘leaseholder’) will be signing a contract which grants you the right to occupy a property for a fixed number of years. This length of time (the ‘term’) should be specified in the contract (the ‘lease’). The building structure and any common parts will be owned by the freeholder who is likely to be your landlord.
A lease is similar to other types of contracts. It is a private legal agreement between you and your landlord and sets out the rights and responsibilities of both parties.
Download the How to Lease guide for more information on ‘What is Leasehold’ – including; how to begin the process, things to consider, a leaseholder’s rights and what to do if things go wrong.
The gov.uk website also has some handy guides to help renters and leaseholders understand their rights.
LEASE (The Leasehold Advisory Service)
We recommend The Leasehold Advisory Service if you are looking for FREE consumer advice on the law affecting residential leasehold and commonhold property in England and Wales. It is totally independent and is funded by the Government.
What is the difference between a Landlord and a Managing Agent?
In simple terms, Landlords own property while a managing agent or Property Manager is instructed by a property owner to supervise and manage properties.
Your Landlord (sometimes known as a Freeholder) is first and foremost a party to your lease. They are the person who owns the land that your property sits on. This could be an individual or a company. You have a right to know who owns the freehold of your property at any given time.
The Landlord has an obligation to maintain the communal areas at your development. In most circumstances (where allowed by the lease) they instruct a managing agent to do this on their behalf.
Your managing agent is not a legal party to your lease (except in exceptional circumstances), but is instructed through a formal arrangement known as a Management Agreement.
Why is Peverel (FirstPort) named in my Lease?
A normal lease only has two parties, a Landlord (or Freeholder) and Lessee (or owner). In these circumstances the managing agent is appointed by the Landlord who has the responsibility for maintenance. Under some historical arrangements, a number of developers put in place what is known as a ‘tri-party’ lease which included the name of the Manager. FirstPort owned companies appear in some of these leases.
The reason for the tri-party lease was broadly to make sure there was a direct relationship between the lessees and the Manager. It was also a way of introducing stability and continuity of the Manager from the ‘build phase’ onwards so that more effective maintenance could be achieved.
We do recognise that this gives us a privileged position and security of tenure in our management . We don’t take this for granted and we work with lessees and landlords to ensure we meet all our obligations under this type of agreement.
Is FirstPort a Landlord?
Owning properties is not part of our core business, which is about managing properties and looking after our residents. We do not buy freeholds, although FirstPort does own a small number of properties and leases from historical arrangements. Our focus now is on providing expert property management services to landlords and customers across both the general residential market and the specialist retirement housing market.
Again, as part of a historical arrangement, FirstPort does currently have an interest in around 350 House Manager flats across the country.
What is a Management Agreement? Why can’t I see it?
The Management Agreement is a formal arrangement between FirstPort as managing agent and your Landlord/Freeholder. It sets out all the responsibilities that we carry out on behalf of the Landlord, the services we provide to Leaseholders and the management fees that are payable as well as any additional fees for one-off services such as subletting consent.
We need the permission of the Landlord to share these. Sometimes the Management Agreement is included in a broader commercial document which contains commercially sensitive information, preventing it being shared. In these circumstances we always endeavour to share appropriate parts of the agreement.