Key Words And Terms Explained
We don’t like jargon, but a frustrating amount of it is used when it comes to working through the lease extension process. To help you decode it, below we thought it would be useful to explain some of the most often used terms:
LEASEHOLD – In essence, owning a leasehold property is like having a long tenancy. Whilst you have rights to use the property until the lease expires, you do not own the property or land.
LEASEHOLDER/TENANT – This is the person who owns the leasehold interest, often referred to as the tenant.
FREEHOLD – If you own the freehold to a property it means you own the property and the land it is on.
FREEHOLDER/LANDLORD – This is the person who owns the freehold interest, often referred to as the landlord.
LEASEHOLD ENFRANCHISEMENT – This is the name given to the general process of extending a lease or buying a freehold.
COLLECTIVE ENFRANCHISEMENT – This refers to when a group of leaseholders come together to buy the freehold.
QUALIFYING TENANT – To have the legal right to extend your lease, you must ‘qualify’ under the governing Act. One of the qualifying criteria is that you must have owned the property for at least 2 years.
QUALIFYING PROPERTY – To have the legal right to extend your lease or purchase your freehold, the property must also ‘qualify’ under the relevant governing Act.
GROUND RENT – This is the rent that is paid to the freeholder, as outlined in the lease.
PREMIUM – This is the price of your lease extension or freehold purchase.
PEPPERCORN RENT – This refer to a situation where the ground rent to pay is nothing. It’s a centuries old phrase that indicates paying very little or nothing.
NOTICE – A legal document that is served by a tenant to the landlord to begin the lease extension process.
COUNTER NOTICE – A legal document that is served by the landlord in response to the tenant’s Notice.