We all know the difference between renting and owning a home, but there’s another category that many of us aren’t familiar with, called leasehold property. This is where you lease (or rent) property, but for a far longer period than a tenant’s usual one-or two-year time frame.
Leasehold contracts can last for a minimum of 40 years — up to 120! Yeah, that’s quite a long time, almost certainly far beyond the point you’ll get to enjoy the place. (The Brits call this type of property arrangement a freehold).
So, how does this long-haul lease work?
In leasehold or freehold arrangement, the property owner (also referred to as the freeholder) gives the leaseholder the right to stay on the property for a specific period. In return, the lessee will have to make a down payment –which is far less than the usual 20%required on a conventional home. Afterwards, the leaseholder pays rent every month like a regular tenant.
The one clear advantage the leaseholders have over regular tenants is that they can renovate the property as they want or even erect whole new buildings on the land (and rent the units out to tenants). However, once the lease ends, unless the contract stipulates otherwise or a longer lease is negotiated, the property or land reverts back to the owner, improvements and all.
Leaseholds are commonly used for commercial properties where malls and businesses can be built on the land, but you can also find them on residential properties like houses and condos.
Leaseholds are very rare in Arlington, but you can still find them across the country.
Properties in Arlington County