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Comment by HenryBemis | Hacker News Reader

One thing that really makes me angry about owning property in England is the (imho) fraudulent setup where I buy house (or flat) and have to pay rent to the land owner. Yes, that is right. The LAND doesn't come with the HOUSE.

Also money laundring helped plenty, on insanely inflating the prices - money from anyone who could afford this. There are buildings in London that are empty. Kind of like a piece of jewelery that you keep as a safe-keep in the safe (but only bigger).

That said, it is a pitty that plenty of people will see that they got a mortgage of 999 for a flat that "now" costs 200-300,but it is healthy for this parasitic/fraudulent behaviour to end.

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This is generally only the case if you buy a leasehold property (which tends to be the case for all flats/apartments granted). Most houses are sold freehold.

Freehold properties are by far the norm in the UK. Leasehold usually only applies to flats/appartments. You are making it seem like leasehold is the norm which is absolute nonsense, dare I say fraudulent.

Flat conversions aside, what he's describing is a common practice amongst builders of new-build homes, which I assume is the experience he's most familiar with.

Developers will allow the freehold to be purchased, although restrictive covenants can be attached - in effect, binding the homeowner to similar restrictions as if they were still leaseholders.

The Government recently announced that it would be banning the practice of charging ground rent for properties on leaseholds longer than 21 years.

https://www.gov.uk/government/news/crackdown-on-unfair-lease...

> Yes, that is right. The LAND doesn't come with the HOUSE.

You say that it "comes" as if it was a universal constant, not affected by parties that sign the contract. I'm confused - are transactions involving land somehow forbidden by law?

No, a leasehold is basically the right to live in a defined space/flat/house on a given piece of land. It is essentially a very long rental agreement.

A freehold is where you own the house, the land, and the right to dwell in said land in perpetuity.

A leasehold however allows you to dwell in a flat(for example) for a defined time (99-125 years is popular) you agree to maintain the internal spaces (typically from the plaster inwards). You will pay a "ground rent" for the right to use the land that your flat is located on. In return the freeholder (the person/company) that owns the whole building and the land, is responsible for the maintenance and upkeep of the fabric of the building. They are allowed to issue a "service charge" to recover the reasonable costs of upkeep and repair.

Crucially you never own the "fabric" of the building, or the supporting land.

So, can't the original owner of the house and land decide whether to offer freehold or leasehold agreements?

Yes and no.

For leasehold house, then its very simple, the leaseholder can buy the freehold. Or the freeholder can make an offer to the leaseholder.

For a block of flats, its a bit more complex. If a majority of the leaseholders club together, they can buy the freehold, and create their own management company.

This sets out in more detail how and when things can happen: https://www.lease-advice.org/advice-guide/houses-qualificati...

The recent scandal about doubling ground rents can be rectified if the leaseholder buys the freehold, but that is expensive, especially as the houses are effectively unmortgageable

If you have a freehold, then you own the land. With a leasehold, you don't own the land. This concept exists in most parts of the world.

The worst part about this concept is that home owners that don't own the land will try to sell you the house like they own the land. This is why I never look at these properties. They should be cheaper, but they are not.

And it may be that the best bit is that with 'leasehold' you have legal protection from responsibities (often due to said leaseholder) which lie in the province of the freeholder. It's not always such a smart idea to have a freehold property in a city.

Because in practice it usually makes little difference. Ground rents are often as little as £10 a year.

That's not true - there have been a bunch of cases recently where the ground rent is much more than that a doubles every x years

https://www.theguardian.com/money/2017/jul/25/leasehold-hous...

A leashold will have a "pepper corn" ground rent, which should be around £10 a year.

Anything else and you need to walk away.

Basically buying anything other than a flat through a leasehold is a scam. That goes for "share of freehold" which is a leasehold, just called differently. Those should really be avoided, because they are basically houses that have been sub divided. This means that the leasehold agreement will be of varying quality.

Either way, you will need to find a competent conveyancer, one that is paying attention and actually reads the contract and leasehold agreement. (basically do not use the ones that are provided by the estate agent/seller/other)

"Yes, that is right. The LAND doesn't come with the HOUSE."

This is absolutely not true. Just because most of the house owners pay rent to the land owner, doesn't mean that you can't buy houses with land or just the land itself.

It's not at all a unique setup, sadly.

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