A leasehold extent provides an exclusive right to a tenant to occupy a property for a certain period. Generally, a written agreement is signed between the parties, the lessor and the tenant. This agreement contains all the conditions related to the agreement, which is said to be legally binding. The primary difference between a leasehold and a freehold property is that the buyer owns a freehold property. In contrast, the leasehold property is only given to the lessee for a short period. There is no interest rate to be paid for freehold properties, whereas a specific interest rate has to be paid for leasehold properties.
The leasehold estate is also known as a non-freehold estate. Any rent agreement also falls under the leasehold estate as here also, the tenant is signing a contract to occupy a property otherwise owned by the lessor for a specific period. Leasehold estate can be completed through verbal agreement if the lease lasts less than one year. However, it is better to prepare a written agreement because it has legal consequences for both parties. There are four different kinds of leasehold estate available such as an estate for years, an estate from period to period, estate at will and estate at sufferance. Estate for years is an agreement that allows a tenant to occupy a property between two specific dates. On the other hand, an estate from period to period includes a monthly tenancy without any specific date. The party has to provide a notice to end the agreement.
The leasehold estate provides the ability of an individual to use a property without purchasing the same. This is less expensive than purchasing a property and more convenient in some cases. The less also can modify certain parts of the property as per the terms of the lease. However, the lessee must pay a particular interest for using the property. This provides a regular stream of income for the lessor. This is beneficial for both parties to a certain extent. However, one big issue is the uncertainty of the status of the lessee after the lease agreement expires. The lessor may decide to lease the property to some other party. Despite this, it is a good alternative for most individuals looking forward to the flexible mode of living or carrying out their business operations.
