Investor Guide to Europe 2014
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TYPES of oWnERSHIP
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ownership
freehold absolute
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Non-time limited interest which represents absolute ownership
of the land itself, the subsoil below it, the airspace above it and
any buildings constructed on it.
•
Transfer of a freehold interest operates as a statutory trigger
event requiring registration at the Irish Land Registry.
freehold fee farm Grant
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An alternative form of freehold ownership (a freehold with the
characteristics of a leasehold) used to impose covenants on
the owner and requiring payment of a nominal rent - occa-
sionally contains forfeiture provisions. In 2009, new fee farm
grants were abolished but many older still remain.
•
Transfer of a freehold fee farm grant interest operates as a
statutory trigger event requiring registration at the Irish Land
Registry.
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Leasehold
Long leasehold
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Used by freehold landowners to maintain the integrity of their
estates whilst generating a capital return; for the tenants, long
leases are valuable assets and «owning» a long lease is often
considered akin to owning a «virtual freehold» in the relevant
property.
•
The term of a long lease can vary from 99 years to 999 years
and a price («premium») paid for its grant.
•
Usually a negligible rent payable (as a «premium» will have
been paid) although in the commercial arena there may be
an element of gearing requiring the long leasehold tenant to
pay an agreed percentage of the annual income received from
occupiers to the freeholder.
•
Generally transferable to third parties by assignment or under-
letting although in some instances the consent of the freehol-
der may be required.
•
In the commercial sector alterations and change of use are
often permitted without the consent of the freeholder.
•
Whilst the freeholder will have a right to terminate («forfeit»)
the lease for tenant breach, in practice there are a number of
statutory protections to relief from forfeiture to provide the
tenant with protection.
•
Capable of being used as security.
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Subject to mandatory registration at Land Registry.
occupational leases (commercial)
•
Used by freehold or long leasehold owners to generate an
income stream.
•
Historically leases tended to be for 25 to 35 years however the
average lease term now is 10 years or 15 years with a break at
ten years.
•
Usually an open market rent is payable (quarterly in advance)
In leases granted before 1 March 2010 there will be provision
for an upwards only rent review to the market rent every five
years. Leases granted from 1 March 2010 have open market
reviews every five years as upwards only reviews are now
prohibited. Fixed rent and index-linked increases are also found
but not yet very common.
•
In addition to paying the rent the tenant will generally be
responsible for covering the full costs of repair, reinstatement,
maintenance and insurance of the property.
•
The lease will restrict the tenant’s right to assign, underlet, use
and alter the property, often requiring the owner’s consent
before such actions can be undertaken. By law landlord’s
consent cannot be unreasonably withheld.
•
Tenants occupying property for the purposes of their business
for a continuous period of five years have an statutory right to
renew their lease (at market rent) on expiry unless that right
has been renounced (excluded) by the tenant –renunciation
can be either before or during the term of the lease . If the
lease has not been «contracted out» of the security of tenure
regime the owner can only resist a renewal of lease on a
limited number of grounds.
•
Leases for more than 21 years are registrable at Land Registry.
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A statutory Commercial Leases database operated by the Pro-
perty Services Regulatory Authority requires the registration of
details of all commercial leases granted since 3 April 2012 .
occupational leases (residential)
•
There are a number of different types of short term residential
leases available, the majority subject to statutory regimes offe-
ring significant protection to the tenant on security of tenure
and sometimes rent control.
•
Most often encountered are residential tenancy agreements
granted after the Residential Tenancies Act 2004. These confer
rights to a tenancy for four years where a tenant has been in
occupation for 6 months.
•
Generally speaking there is no requirement to register resi-
dential tenancies at Land Registry but they must be registered
with a statutory body called the Private Residential Tenancies
Board (PRTB).
RIGHTS affECTInG oWnERSHIP
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Easement
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A right which benefits one piece of (dominant) land and
burdens another (servient) piece of land, note in this context
«land» includes buildings. The two pieces of land affected must
be in different ownership.
•
In general a legal easement must either take effect as a right
«in fee simple» or be granted for a fixed term and if it concerns
registered land must be registered at Land Registry. Easements
acquired by prescription (long usage rather than formal grant)
will need to be registered in Land Registry by 2021.
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Interference with an easement gives rise to an action for
private nuisance.
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Mortgage
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A type of security.
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Whilst any charge granted since 1 December 2009 (by way of
legal mortgage) over property does not operate to transfer
title to the property to the lender, it creates a legal interest in
the property and affords the lender certain rights including a
PRoPERTY LaW
