The History of Leasehold Property

We recently discussed on our blog the difference between leasehold and freehold, but did you know that the leasehold ownership concept dates back to medieval feudal times? Explore with us the fascinating history of leasehold property ownership, and the differences and similarities between property ownership then and now!

The History of Leasehold Property Infographic

Did you know that in Medieval times, feudal law allowed villeins or serfs to work a plot of land for a fixed period of time? Work would often be agricultural or working as a tradesmen. Families were able to live and work on a plot of land in exchange for providing their produce or trade services to the landowners or those further up the social hierarchy. Sub-tenants themselves could then lease out portions of their land and could have sub-sub-tenants in a sort of pyramid system, each taking a portion of their tenant’s income or goods. This was called subinfeudation.

Land was (and still is) power, and this system allowed landowners to retain their ownership of the land whilst still being able to profit from the land through the workers and maximise their earnings. This system also unfortunately made it impossible for hard-working families to climb the property ladder.

In the 1200s, subinfeudation was abolished so that the king could have control over the creation of any further tenurial relationships. Landowners instead would issue land rights to certain estates and on different terms to their sub-tenants. For example, “estate in fee simple” would allow families to live and work on the land in return for providing the landowner with money or a service, and their agreement would allow the estate to be inherited by the heirs so that families could keep the land rights within the family. Whereas “estate for life” would allow the sub-tenant to enjoy all of the products of the land and the fruits of their labour for the duration of his life, but ownership would afterward revert back to the original landowner who granted the land rights to the estate.

By the beginning of the 1900s, 90% of all housing in Britain was privately rented, which caused much controversy when wages started to increase and landlords were able to arbitrarily raise rent to exploit their tenants since there were few regulations in place to protect them.

The 1920s marked the beginning of the modern leasehold property system, introducing long leases. This allowed landowners to bring in steady money for long periods of time whilst still retaining ownership of the land. In the 1950s, there was a significant increase in the construction of flats and therefore leasehold property ownership. It was far more economical to build upwards rather than outwards, and leasehold property ownership was the only solution to selling individual properties within a house of multiple occupancy. Freehold ownership of flats was impossible as freehold property legally has to have its own land boundaries, which they can’t have if there are multiple properties stacked on top of each other in tower blocks.

In the 1960s, many elderly tenants found themselves evicted, losing their homes due to leasehold expiration and those most vulnerable were confused by the legalities of leasehold property ownership. Legislations were introduced to allow owners of leasehold houses to extend their leases by an additional 90 years. Flat owners weren’t able to do this until the 1990s.

Leaseholder owners certainly have a lot more rights now!

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