PURCHASING property is a major, often life altering decision. There is no doubt that real estate is one of the most practical investments that one can make. In making such decisions one does have to be diligent not only about the financial implications, but the legal aspects. The key is to determine the type of commercial or residential property, the return on investment for the property and the terms of purchase.
Laws regarding real estate ownership vary and when it comes to leasehold, many fret at the concept due to lack of understanding. There are several differences between freehold and leasehold ownership, but it is important to understand the terms, and legal framework to make an informed decision. Developers are aware of consumer rights and must provide the adequate and appropriate documentation to ensure satisfaction between the parties.
As explained in previous articles, there are several types of real estate titles, including Freehold Title, Sectional Title, Consolidated Title, and other less common means of holding title to a property, such as Leasehold Title.
Leasehold land is a title held by a leaseholder (lessee) for the term of the lease, which could be indefinite or perpetual. The lessee is granted the right to occupy land/stand and to develop the stand while paying monthly/annual rent.
Flats, or apartments are usually sold as leasehold, and some shared ownership homes. Some houses are also sold on a leasehold basis. If you own a leasehold home, your lease will probably set out how much ground rent you will have to pay to the landlord. Some developers and freeholders may set ground rents much for several reasons.
In context to leasehold title on residential stands the procedure is explained as follows. A leaseholder has a lease agreement with the owner of the stand, which sets out the legal rights and responsibilities of either side. The local authority, City of Harare, issues a Certificate of Compliance once the stands are serviced.
These authorise the lessee to commence building their home. Once the lessor has access to the stand, the monthly/annual “ground rent” payments are due to the lessor of the ground. The lessor is expected to register the leasehold interest with the deeds office where they will obtain a registered Deed.
Within the leasehold agreement there are terms used to determine the lease duration. Indefinite, or in perpetuity, is a leasehold agreement that specifies a long and renewable period of tenancy, which outlasts the length of the agreement.
Fixed term leases are common and refer to a property that has a specific duration of time as defined in the lease agreement. This type of lease clearly specifies the start and end date. The agreement automatically renews automatically at the end of the term.
Leasehold at Will has no end date and no initial period of tenancy defined in the agreement. The leasehold continues as long as the owner gives the tenant permission to occupy the property. Leasehold at sufferance refers to a person in possession of the property with permission from the owner.
An indefinite, or perpetual, lease means an unlimited leasehold interest, arising out of, or created by, an instrument that conveys to a person designated as a lessee the right to possess, enjoy and use the land with no fixed maturity date, in other words forever.
It can provide for 35-99 years leasehold with the lessee having the first right of refusal or else known as an offer to purchase the land should the owner ever wish to sell it. It guarantees the Lessee, also known as the tenant, use of an asset at a significantly reduced cost (thus making it more affordable) and guarantees the Lessor, the ground owner or landlord, regular payments for a specified or indefinite period in exchange.
In the Zimbabwean context leasehold interest has always been in existence, under farms, industrial, commercial and government residential leases. The lessee enters into a leasehold agreement with the lessor. This is then registered at the Deeds office where a registered Deed is issued. The registered Deed with the registrar provides an undivided share relating to the property, coupled with the exclusive right of occupation.
West Property has an exclusive mandate over Pomona City, where over 6 000 stands are available for Freehold and Leasehold titles. This is an exceptional piece of land, located at the heart of Harare’s northern suburbs and with quick access to the CBD, schools, shopping centres and health facilities.
The leasehold option is available in Phase 1B, which has stands ranging between 600 and 800sqm. Potential buyers have an opportunity to invest in their dream homes for less. A legal team is available to assist with questions about Leasehold Title, and you talk to your solicitor for further clarity.