You may have only just come across Section 7 Reports and not know what they are or who writes them. You’re in the right place. In this blog, we will...
Continue readingMuch of our conveyancing work relates to Leasehold properties. A long lease is not just a “tenancy”, it gives the leaseholder the rights to use the property like a freehold for the duration of the lease subject to the terms in the Lease and the ultimate ownership of the Freeholder. A leasehold interest is registrable with the Land Registry.
A lease is a contract between the Lessee (Freeholder) and the Lessor (leaseholder/landlord) which outlines the rights and liabilities of each party, i.e. rent, repairs, maintenance etc. The lease will also contain any limitation or obligation as to how the property is used or occupied. The wording of Leases can vary depending on parties, but Leases in a building/block are usually similar.
Before agreeing to a executing a lease you need to be clear of your obligations and liabilities. We will do this by discussing with our clients and including this in the purchase report.
Unlike a freehold, when the property is Leasehold, the owner needs to extend the Lease when the term is around 85 years. This is because most lenders are reluctant to lend on the property with under 80 years of Lease term remaining. The Freeholder charges a premium for the extension of a Lease. This is the main income of the Freeholder. The premium on a Lease with a term of less than 80 years is more expensive.
Once you have owned the Lease for 2 years you have a statutory right to extend the Lease for another 90 years with a peppercorn rent (no rent). This protects Lessees from unscrupulous Landlords. However the Landlord can charge a premium.
As a Leasehold owner you are likely to pay service charge towards the services that Landlord provides, including ;insurance, repairs and maintenance of common parts of the structure. The Lessee is liable for repair and maintenance of the interior of the property.
Your Landlord is required to consult you on any major works on the property which are likely to cost at least £250.00 payable by each of the Lessees. (section 20 consultation)
We know this may all sound technical and complicated. However purchase of a Leasehold property does not have to be a stressful task as long as you know your rights and liabilities, and you arerepresented by a knowledgeable solicitor/conveyancer.
Contact us for advice on any Leasehold property issues including purchase, sale, lease extension, licence for alteration or freehold purchase by Lessees (enfranchisement)