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Leasehold property - is there a problem?
There has been a lot of negative press coverage recently, in relation to owning leasehold properties. As a result, some prospective purchasers may feel nervous about the thought of buying a leasehold property, or are put off altogether.
It is important, though, to make clear to prospective purchasers that they shouldn’t feel as though owning a leasehold interest is negative. Leasehold is simply another form of legal ownership, alongside owning a freehold interest.
As specialist conveyancing lawyers, we would review the lease in detail, to ensure the leasehold 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.
As conveyancers and estate agents, it is our responsibility 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 e.g. 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.
As conveyancing lawyers, we will obtain a full copy of the lease early on, and review this in order to check whether there are any onerous provisions the purchaser may need to be made aware of, or question further.
The items we focus on are:
- The current ground rent payable and whether this will increase during the term of the lease
- The current service charges payable and any increases expected over the next 2 years
- Whether the landlord or management company’s consent is required for future alterations to the property
- The extent of the leasehold interest being purchased and the purchaser’s maintenance responsibilities
- The level of notice fees payable
- The list of regulations which the purchaser must abide by
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.
It should also be noted that the level of fees to be charged for consents, notices and information can be legally challenged if the level of fee is not specified in the lease, then the charges must be ‘reasonable.’ It is important that the purchaser’s (or seller’s) conveyancer is aware of the relevant provisions in order to be able to challenge the level of fees.
Please click here to read previous estate agent e-updates.