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Armchair land referencing #21

This time we’ll explore what exactly is ‘land ownership’ and why does it have value and importance? The answer slightly depends on who you ask. Economists and lawyers see land a little differently from one another, but both agree that the supply is comparatively fixed. Land itself can’t be created – although it can be developed (at a cost). As Mark Twain said, ‘Buy land; they aren’t making it anymore.’ Economists may also note that the law of diminishing returns applies to land as there is a ceiling to just how much investment can be made in land to yield a return worth the additional effort. And land can provide utility (a benefit such as somewhere to live) and income (such as rent). The scarcity, the investment and the benefits and/or income from rent create value.

Hang on, I hear you ask. What about land that has been reclaimed? Well, that’s interesting, but reclaimed land is just improved land, not new land. I was brought up in a house in North Wales that was once the country house of the mayors of Chester who travelled from Chester’s port to the quay at Aston, several miles downriver by boat. I used to dig up shells in the garden, but the house has long been over a mile from the Dee and Chester’s port silted up in the 16th and 17th centuries. As a result, a huge amount of local land (whole neighbourhoods) is essentially new. Lots of places have seen land reclaimed. Liverpool lost its pool; the Thames in London was narrowed sufficiently to make space for much of Westminster; Manhattan Island has been extended in all directions; about half of the Netherlands is land reclaimed from the sea – and the Chinese have reclaimed twice as much land as the Dutch; and because so much of it has been filled in, Sydney Harbour recently lost its claim as the largest natural harbour in the world to Poole in Dorset. So, maybe the supply isn’t absolutely fixed.

Because land is worth something it is desirable to own it. Under a feudal regime, the dominant form of land tenure in western Europe until comparatively recent history, all land belonged to the state (or head of state) and was ‘feu-ed’ to their subjects in a hierarchy of fealty that cascaded through the aristocracy to their lords of the manor to their tenants and their serfs: the people who had the utility of the land – those who actually occupied and worked the land. In the UK the feudal system is now abandoned, although aristocratic estates still remain (and in Scotland the theoretical feudal regime was only formally abandoned in 2004) but those occupiers of land at the useful end of the hierarchy are still not necessarily the outright owners. We have an array of types of ‘ownership’, again in a hierarchy, which I very briefly describe:

Freeholders are the outright owners of land and the property that stands on it.

Leaseholders have similar interests in the property (subject to the terms of their lease, which might include a ‘ground rent’) but it is time bound, so when the lease expires the land and all that stands on it reverts back to the freeholder. (There can be any number of leaseholders between the freeholder and the most junior of the (sub-)leaseholders.)

I anticipate that we shall all hear more about a relatively new tenure called ‘commonhold’, which is akin to perpetual leasehold that includes a share of the freehold. This is supported by the Leasehold Reform Act 2002 and will help prevent developers leveraging additional income by setting ground rents that might be an additional income stream instead of being used for maintenance. There were only about 20 of these in the UK in 2020 but there is pressure to see this increased significantly, especially for new build residential multi-occupancy properties. There’s been a quite a bit about this in the news recently and we should expect to see further reform.

Tenants have the right to occupy a property but have no other claim to it and their tenancies may normally be terminated (with notice) at will. In the UK most residential tenancies are assured shorthold tenancies (20% of all UK households) or council tenancies (17%). There are also business tenancies, for the purposes of a trade or profession (for shops, workshops, offices, etc). And there are farm business tenancies and agricultural tenancies applicable to farms. The first are those agreed under the Agricultural Tenancies Act 1995 after 01 September 1995 whereas the second are those agreed before that date. The earlier ones have a lifetime of tenure, with those agreed before 12 July 1984 also carrying statutory succession rights on death or retirement for up to three generations. There are also life tenancies which, as the name suggests, are tenants with a right to remain for life, possibly as a result of being the beneficiary of a trust. There are lots of other types of tenancy; relating to employment (e.g. for vicars and pub landlords), occupational tenancies, and a host of others. Tenants of most types are usually not recorded by Land Registry because the tenants may not dispose of the property. As a result, they would normally only be listed as occupiers in a book of reference.

These types of tenure have value. Next week, in the last of this series of ‘Armchair Land Referencing Guides’, we’ll examine what ‘value’ means and how this may realized and leveraged and the future role Land Referencers might play in this.


This article is written by Ashley Parry Jones, Director – Planning, WSP. The opinions expressed are those of the author and do not purport to reflect the opinions or views of WSP or SoLR or its members. The information provided does not and is not intended to constitute legal advice and instead is offered for general purposes only. It does not constitute the most up to date legal information. Any links and references provided are for the readers’ convenience only and do not constitute a recommendation of those sources.

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