Conveyancing For Leasehold Property

Leasehold conveyancing is the legal process for buying a leasehold property. All homes are owned on either a freehold or leasehold basis. Freehold means you own the building and the land it stands on outright. Leasehold means you have a lease from the freeholder to use the home for a set number of years. What you are actually buying is the benefit of the lease contract rather than outright ownership of the property. Leases are long-term usually from 90 to 999 years but can often vary in length. In this article, conveyancing for leasehold property, we take a look at the points to consider and the process involved.

Free Initial Telephone Discussion

For a free initial discussion on how we can advise you on conveyancing for a leasehold property, get in touch with us today. We will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or complete our online enquiry form and a member of the team will get back to you.

What does leasehold conveyancing involve?

If you are buying a leasehold property, your solicitor will need to look through the lease in addition to the usual legal requirements of purchasing a property. Further work will be required in dealing with the landlord and management company as well as the vendor’s solicitor. This will add to the time and cost involved in the conveyancing process.

It is not always obvious what the tenure (Tenure describes whether the property is leasehold or freehold) of a property is. If it is a flat, it is probable that it is leasehold. A lot of new build houses are leasehold as developers see it as an opportunity to increase their profits from a scheme by selling the freehold. Additionally, Victorian terraced housing is often long leasehold. Besides this, most houses tend to be freehold. The estate agent’s marketing materials should confirm the tenure of the property. It is imperative that your solicitor confirms the status of the property early on in the purchasing process.

On 7^th January 2021, the government made new proposals concerning leasehold properties due to their unpopularity and the difficulty some people experience when trying to sell their home when the length of the lease is quite short. These proposed changes include:

• Millions of leaseholders will be given a new right to extend their lease by 990 years.
• Changes could save households from thousands to tens of thousands of pounds
• Elderly also protected by reducing ground rents to zero for all new retirement properties

What is the length of the lease?

One of the most important things your solicitor needs to do is find out how long is left on your lease. The remaining term of your lease could affect your ability to get a mortgage. Most lenders won’t offer mortgages on properties with less than 70 years left on the lease and some will want over 80 years. This is because if they did, the lender would be lending on a depreciating asset and their security would be diminishing by the year as the lease winds down.

The fact is, the shorter your lease the less it is worth and the more it will cost to extend it. This will also affect the value of your property as a place with a short lease is harder to sell. Once there is less than 80 years left on the lease, lease extensions become more expensive. As many buyers want to maintain their investment – and won’t want to run into problems themselves when they want to sell – you can often find that well-informed buyers are reluctant to proceed if a lease is much shorter than 90 years.

If you are buying a property subject to a lease of under 90 years make sure that you factor in the cost of having to obtain a lease extension in the near future. Or try to use this future cost as a negotiating tool when agreeing on the price.

It’s also important to be aware that leaseholders are only entitled to a statutory lease extension if they have owned the leasehold property for at least two years. Although you could try asking the vendor to start the lease extension process for you.

As mentioned earlier, the government is looking to radically change the whole leasehold system and as such, it is important to keep abreast of the latest developments on this subject.

What will my solicitor check during the conveyance?

As well as checking the length of the remaining lease your solicitor or conveyancer should also make a number of enquiries about your lease to the landlord. These include:

• What charges will you be liable for as the leaseholder and when will they be due? These charges can include service charge and ground rent.
• Are any renovations planned for the property that could affect the value of your property, your enjoyment of it, or the service charge.
• Service charges are usually based on an estimate of what the landlord thinks will be spent over the year. They should produce an end of year statement to show how much has been spent and how much is left in the account.
• Is there a sinking fund and what the balance is. This is a fund to deal with any building work on the property.
• The extent of the boundaries of the property. Your solicitor needs to check exactly what the boundaries of your leasehold property are.
• Restrictions on use of the property. Your solicitor should also check the lease for any restrictions on what you can do with your property.

How We Can Help

Our team is well versed in dealing with all the various aspects conveyancing for leasehold property and we are here to help in any way we can. We are able to explain clearly the legal issues and provide open, honest and professional advice.

How to Contact our Commercial Property Solicitors

It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of reducing risk, saving you money and ensuring you achieve a positive outcome.

To speak to our Commercial Property solicitors today, simply call us on 0345 901 0445, or allow a member of the team to get back to you by filling in our online enquiry form. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.

Authored by Ben Posted in Commercial Property, News Tagged as