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‘Don’t be put off’ by leasehold property
An expert in property law has urged homebuyers not to be put off if a property is leasehold.
Sarah Barnes, head of Residential Property at regional law firm Napthens, warns that despite recent controversies involving leasehold and the actions of particular landlords, buyers should be comfortable with the prospect.
With leasehold properties, the land a property is sited on is owned by a landlord, and the tenant usually pays ground rent and costs to carry out certain work to the property.
Recently the property industry was hit by concerns that some property developers had been selling new-build homes with controversial ground rents that often saw rapid increases after a home had been purchased.
However, Sarah Barnes of Napthens points out that leasehold is simply another form of legal ownership and with professional advice, should cause no issues.
She said: “Some prospective purchasers may feel nervous about the thought of buying a leasehold property, or are put off altogether.
“It is important, though, that when purchasing a property, legal advisors will review a lease in detail to ensure the provisions are reasonable and would point out any potential issues which may arise.
“Some leaseholders are completely unaware of even the basic provisions of their lease, even as far as being unaware of the remaining lease term.
“It is the responsibility of conveyancers and estate agents to work closely together to ensure that prospective purchasers are made aware initially of the basic provisions of the leasehold interest they are looking to buy. For instance, the remaining lease term, whether the property is shared ownership, the level of ground rent and service charges payable.
“Highlighting the basic provisions, will hopefully, reassure prospective buyers of the legal title and current position.
“The items we focus on are issues, including the current ground rent payable and whether this will increase during the term of the lease, any service charges payable and increases expected, and whether landlord or management company consent is required for future alterations to the property.
“There is no doubt that at present, there is a level of unfairness in the way that landlords and managing agents can charge different levels of fees in order to grant consents and provide information. It is this uncertainty that gives leasehold properties a bad reputation.
“However, when a reasonable landlord and management agent are in situ, this type of home ownership can run very smoothly.”
For further information on leasehold properties, please do not hesitate to contact a member of the Residential Property team.