A perpetual lease, sometimes referred to as a ‘Glasgow lease’ or ‘Māori lease’, is somewhat of a misnomer as it usually lasts for 21 years.

Once the lease expires the tenant has an automatic right of renewal on the same terms and conditions as the original lease. The lease itself takes the form of a ground lease, covering the unimproved land only. Any improvements form part of the leasehold interest and are owned outright by the tenant.

 

Buying leasehold property

When you buy a leasehold property you are purchasing the leasehold interest and rights to occupy the land. This comprises the improvements (e.g. a house or sheds) as well as the rights and responsibilities of the lessee under the lease.

The terms of the lease will be detailed in the sale and purchase agreement. They are generally reasonably straightforward, but it is a good idea to ask your solicitor or professional advisor to review them before you commit.