Common property interests
Common property interests are :
A) Freehold interests
. The owner holds absolutely and in perpetuity
. Absolute ownership unencumbered by any other interests.
. Possesses all the rights and benefits of the property
. Subject only to taxation, compulsory purchase, police power etc.
. However there is a limit on the extend of physical ownership:
- air right;
- minerals underground;
- planning control;
- treasures underground.
B) Leasehold interests
A leasehold owner has :
. the right to occupy the property for the unexpired term;
. the right to claim a new lease;
. the right to receive profit rent;
. restricted in the dealings
e.g. under express covenants such as to keep premises in good repair.
Leasehold interests revert back to the State Government at the end of the leasehold term. Owner need to pay premium to obtain a new leasehold title.
C) Life interests
. Interests created whereby the property is settled on a person for life and after his death passes to the heirs of his body.
. The interest may pass from generation to generation unless there are no heirs.
Example: ” … to my wife for her life and then to my son, John ….”
D) Ground Lease
. For building operations or for the use of land only.
. is secured because the rent is a percentage of rack rent (full rental value).
. Lease duration up to 99 years
. Does not provide a hedge against inflation
. Periodic rent reviews are provided for within the lease term
Peppercorn rent is the minimal rent paid for the duration of the construction period for a building during the initial ground lease period.