Key considerations for inexperienced property investors
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When acting for inexperienced investors in England and Wales, the biggest revelation is often how different the experience is compared to other jurisdictions.
England and Wales operate under a feudal property system, where freeholders own both the land and buildings in perpetuity.
They can grant leasehold interests, which are time-limited and governed by a lease.
The lease describes the land demised, the initial tenant, the term, and the tenant’s rights and obligations.
Tenants can grant further leases to undertenants, provided they expire before the tenant’s leasehold interest.
Investors may acquire long leasehold interests (commonly 999 years) in a building, subject to undertenants, with the same principles applying (notwithstanding that we refer to freeholders below).
In a single let building, the freeholder is usually responsible for insuring the building and repairing any insurance damage, while the tenant is responsible for keeping the building in good repair.
In a multi-let building, the freeholder would also typically be responsible for keeping the non-demised parts of a building in repair and providing services to the building such as lighting common parts and bin collection, with these costs passed on to tenants through a service charge regime.
The full article was first published by FT Adviser in May 2025 and is available to read here.
