Common parts
The communal areas of a building, which are commonly the responsibility of the Freeholder to maintain. These might include a shared entrance hall, staircase and outside space, as well as exterior walls and the roof.
Freehold
Owning the Freehold means owning the property and the land it stands on outright, including the ground rent. Your name will be recorded in the Land Registry as ‘Freeholder’, owning the ‘title absolute’. Freeholders are usually responsible for maintaining the common parts of a building, unless the leaseholders have claimed their Right to Manage (RTM) or the obligations have been transferred to a Residents’ Management Company (RMC).
Ground Rent
A fee, often charged annually, which a leaseholder must pay to a Freeholder as a condition of the lease. A lease should set out how this ground rent amount is paid, if and when it can be increased and what happens if it isn’t paid. A Freeholder must ask for the ground rent officially, in a prescribed format. Ground rent is also used as a general term to represent the Freehold title and any associated rights and obligations.
Leasehold
Holding a lease – a contract – from the Freeholder (or landlord) to use the land a property sits on for a certain number of years. Leaseholders normally pay an annual ground rent to the Freeholder for this right. A lease will also state who’s responsible for buildings insurance and maintenance.
Landlord & Tenant Act 1987, Section 5 Notice
This is the formal paperwork (Notice) that must be served on leaseholders by the Freeholder before the ground rent is sold to a third party. The Notice gives the leaseholders the first right of refusal to buy the ground rent. This is relatively straightforward. At Gateway Ground Rents, our legal department takes care of all the paperwork for you.
Landlord & Tenant Act 1987, Section 6 Notice
This is the formal paperwork (Notice) that leaseholders must serve on their Freeholder if they wish to take up the offer to purchase the ground rent (following on from the Section 5 Notice, above). Over half of the leaseholders must agree to make this purchase and nominate a person or company to handle this.
Landlord & Tenant Act 1987, Section 18 Information Notice
This is the formal paperwork (Notice) served on leaseholders by a third-party purchaser of the ground rent if there is a possibility that the Section 5 Notice procedure (see above) has not been followed correctly.
Leasehold Reform, Housing & Urban Development Act 1993
A legal act that gives leaseholders of qualifying buildings the right to purchase their Freeholder¹s interests, commonly known as enfranchisement.
Right to manage (RTM)
Under the Commonhold & Leasehold Reform Act 2002 leaseholders of qualifying buildings have the statutory right to take over the management of their property from their Freeholder or landlord by setting up a special, RTM company. The landlord will still own the building, but pass on the management of it.
Section 166 (Ground Rent Notices)
Section 166 of the Commonhold and Leasehold Reform Act 2002 states that leaseholders do not have to make rent payments unless the Freeholder has sent them the formal Notice in a certain format, with the correct information. This information includes the amount to be paid, when this is to be paid and the date of payment set out in the lease. Until the Notice is served correctly, rent payment can be withheld. This is an important document that many Freeholders are unaware of.
