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Leasehold Interest

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  • 16-09-2004 7:41pm
    #1
    No2
    Closed Accounts Posts: 5 ✭


    Hi All,

    I'm interested in renting a small to medium size unit in a shopping center in Cork. All the adds I see for them are "Leasehold Interest for sale"....but, does anyone know what this means? I don't want to sound like a complete idiot going to the agents!

    Also, has anyone got any idea what kind of money you could expect to pay for such a unit. I presume noone will just give up a lease?

    Thanks for your help.
    No2


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    #2
    Victor
    Registered Users Posts: 78,387 ✭✭✭✭Victor


    A owns a shop. This is called the freehold.

    A leases shop to B on 35 year lease, with rent reviews at 5 year intervals. B uses shop for say 12 years. Rent is reviewed in year 5 and 10. As rents tend to increase every year, but the rent is fixed from years 12-15 (actually 10-15). So B can sell the leasehold to C for the difference between the actual rent and the current market rent.

    When someone is selling the leasehold, they are selling the right to collect the rent (part of which you have to pass on to the owner), they are neither selling the ownership of the building nor the use of the building.


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    #3
    EKRIUQ
    Registered Users Posts: 4,386 ✭✭✭EKRIUQ


    My interpertation of the leasehold buildings is that your are purchasing the right to rent the building for 5 years or 20 years or what ever the lease lenght may be. Rent is reviewed every 5 years. You don't actually own the building but the right use it for your business. Once you have rented the building for 5 years or more you are automaticly entitled to another lease of 5 years.

    A lease agreement can be very technical and be as long as 50 pages so its better for a solicitor to check it out before commiting yourself as there can be many hidden clauses about sub-letting or the type of business which can be operated from the premises.


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