When looking to purchase a park home at a residential park, understanding the difference between leasehold and licence agreements is essential. In simple terms, a licence agreement is the most common arrangement for residential park homes in the UK, where you own the home but not the land it sits on, paying a pitch fee to the park owner. A leasehold agreement, on the other hand, gives you ownership rights to both the home and the land for a specified period, typically with different legal protections. These agreements govern your rights, responsibilities, and security of tenure, making it vital to understand the implications of each before making your investment decision.
- Licence agreements are the standard for most residential park homes
- Leasehold agreements provide different ownership rights and responsibilities
- Your security of tenure and inheritance options vary between agreements
- Understanding the legal protections each offers is crucial for making an informed choice
- Different agreements impact your ability to make changes to your property
Understanding park home ownership agreements
When you’re considering purchasing a park home, getting to grips with the different ownership agreements is absolutely vital. Unlike traditional property purchases, park home ownership involves unique legal arrangements that determine your rights, responsibilities, and security.
At Arden Parks, we see many prospective buyers who initially don’t realise the importance of understanding these agreements. The ownership document you sign will impact everything from your ability to make alterations to your home to how you can pass it on to loved ones.
The main types of agreements you’ll encounter are licence agreements and leasehold agreements. These differ substantially in terms of what you own, your security of tenure, and your relationship with the park owner. Making the right choice between these options can significantly impact your enjoyment of park home living at our Leedons Residential Park or other residential communities.
What is a leasehold agreement for park homes?
A leasehold agreement for park homes gives you ownership rights to both the home and the land it sits on for a set period. This period is typically long-term, often 99 years or more, similar to leasehold arrangements for flats or apartments.
Under a leasehold agreement, you’re effectively purchasing a lease on the land from the park owner. This gives you more security of tenure than a licence agreement, as your rights to the land are legally protected for the duration of the lease.
With a leasehold, you’ll likely pay ground rent rather than a pitch fee, and you may have more freedom to make alterations to both your home and the surrounding land (within the terms of your lease). You’ll still need to comply with park rules and regulations, but your relationship with the park owner is that of leaseholder and freeholder.
Leasehold agreements are less common for park homes in the UK but can be found in some luxury residential parks. They often appeal to those seeking additional legal protections and longer-term security for their investment in luxury residential parks as a retirement option.
How does a licence agreement work in park settings?
A licence agreement is the most common arrangement for residential park homes in the UK. Under this agreement, you own the physical home but not the land it sits on. Instead, you pay a pitch fee to the park owner for the right to keep your home on their land.
With a licence agreement, your rights are protected under the Mobile Homes Act 1983 (as amended), which provides specific legal safeguards. These include security of tenure, meaning you can’t be evicted without a court order and only under specific circumstances outlined in the Act.
The licence agreement establishes your relationship with us as park owners, detailing your rights and responsibilities. It will cover aspects such as pitch fee reviews (usually annual), park rules, utility connections, and maintenance obligations.
At Broadway Park, like our other residential parks, licence agreements provide a clear framework for peaceful enjoyment of your park home while maintaining the community standards that make our parks such desirable places to live.
It’s worth noting that licence agreements in residential parks should not be confused with holiday park arrangements, which offer significantly fewer protections and aren’t suitable for permanent living.
What are the key differences between leasehold and licence agreements?
The fundamental difference between these agreements lies in what you actually own. With a licence, you own only the home itself, while with a leasehold, you own rights to both the home and the land for the lease duration.
Security of tenure varies significantly. A licence agreement provides security through the Mobile Homes Act, while a leasehold’s security comes from property law governing the lease itself. This affects your long-term rights and the circumstances under which you could potentially lose your right to remain.
Inheritance options differ too. Under a licence agreement, you can pass on your home to family members, who will then enter into a new agreement with the park owner. Leasehold arrangements typically offer more straightforward inheritance as part of standard property law.
When it comes to making modifications, licence agreements often require park owner permission for external changes, while leaseholds may offer more freedom (subject to lease terms).
Resale considerations also vary. With a licence agreement, the park owner is entitled to a commission (typically 10%) on the sale price when you sell, while leasehold sales follow more traditional property processes.
Financial implications differ as well. Licence agreements involve pitch fees that can increase annually, while leaseholds typically involve ground rent payments, which may have different review structures.
How do you choose the right agreement for your park home?
Selecting the right agreement type depends on your personal circumstances and priorities. Consider how long you plan to live in the park home – if you’re looking for a permanent retirement solution, the security aspects of each agreement type become particularly important.
Think about your estate planning needs. If passing your home on to family is a priority, you’ll want to thoroughly understand the inheritance implications of each agreement type.
Budget considerations matter too. While initial purchase prices might be similar, the ongoing costs structure differs between leasehold and licence arrangements. We can help you understand the long-term financial commitments associated with each option.
Many buyers prioritise having control over their property. If making modifications or personalising your home and surroundings is important to you, pay special attention to the restrictions under each agreement type.
Finally, consider your comfort with different legal frameworks. Some people prefer the familiarity of leasehold property law, while others appreciate the specific protections of the Mobile Homes Act under licence agreements.
Key takeaways about park home ownership agreements
Understanding the differences between leasehold and licence agreements is crucial when purchasing a park home. A licence agreement offers ownership of the home only with rights protected under the Mobile Homes Act, while a leasehold provides ownership rights to both home and land for a set period.
Each agreement type offers different advantages depending on your circumstances. Licence agreements are more common and have specific protections designed for park home living, whereas leaseholds operate under traditional property law principles.
We always recommend seeking independent legal advice before signing any agreement. A solicitor with experience in park home legislation can provide invaluable guidance tailored to your specific situation.
At Arden Parks, we’re committed to transparency throughout the purchase process. We’re happy to explain the details of our agreements and answer any questions you might have about living in our residential parks.
Remember that the right agreement for you depends on your personal priorities, whether that’s long-term security, inheritance plans, or flexibility to modify your property.
Frequently Asked Questions
Can I get a mortgage for a park home?
Traditional mortgages aren’t available for park homes, as they’re technically classified as mobile homes rather than real estate. However, there are specialist finance options available through companies that specifically cater to park home purchases.
What happens to a licence agreement if the park is sold to a new owner?
Your licence agreement remains valid even if the park changes ownership. The new park owner must honour the existing agreements and cannot force residents to sign new ones or leave without proper legal grounds.
Are there age restrictions for living in residential parks?
Many residential parks, including Arden Parks’ residential communities, have age restrictions requiring residents to be 50 years or older. This helps maintain the peaceful, community-focused atmosphere that many residents value.
How often can pitch fees be increased under a licence agreement?
Pitch fees can typically be reviewed annually. Under the Mobile Homes Act, park owners must use a specific form to propose increases, giving residents 28 days’ notice. Any disputes over increases can be referred to a tribunal.
Can I run a business from my park home?
Most residential park licence agreements and park rules prohibit running a business from your park home. This helps maintain the residential nature of the community and prevent commercial activities that might disturb other residents.
