Posted by Kate Boyes BSc (Hons) FARLA MRICS on Tue, 2012-07-10 15:23
For many people the first property they buy is a long leasehold flat. This is, of course, the most complicated form of home ownership yet many people get little or no explanation of the realities of what is involved.
As a long leaseholder you are a type of tenant. Fundamentally you are bound by the terms of that tenancy which are are set out in the lease subject to the various statutory rules and regulations. Whilst very few leases are identical in form (even within the same development often) they will have various common elements and it is these that we intend to cover. There is however no substitute to obtaining proper comprehensive advice on your lease terms when you purchase and a good lawyer will do this.
The basics are how long is left on the lease and the rent. The first element is important since this can have a bearing on the cost of obtaining an extension ( see our blog post on this topic) and also how saleable the lease is. Generally in our experience a lease with less than 80 years remaining can now be difficult to sell. It is then important to know the rent. You should also check if there are any rent review provisions and make sure you understand these. It is important to bear in mind that the amount of ground rent will have a significant effect on the price of any extension.
The next important sections to understand relate to repairs: who is responsible for repairing in leases. Often you will be responsible for all internal repairs and redecorations and the landlord for all external. It is important to make sure these clauses are comprehensive and clear to prevent dispute later. Elements that are often worth checking are things such as who is responsible for repair and replacement of windows particularly if you are on a raised floor of a block.
Insurance: this will usually be the landlords responsibility subject to you repaying the costs. Again best to check although if you are getting a mortgage your lawyer should have checked this.
Service charges: often in practice for people living in a flat cause the most problems. It is important that you fully understand the clauses relating to these. Normally there will be a mechanism for determining the total service charge and then how this will be divided up and when you will be notified. Often theses clauses are detailed and require the landlord to jump through various hoops before the service charge is payable. Understanding these and what sums may be charged such as reserve funds will help you better understand one of the major liabilities of living in a flat and one which many leaseholders have no control over. Remember it is often for the freeholder to plan the schedule of works with little regard for the leaseholders personal circumstances.
Can I sublet and alter the flat? Again most leases will have specific provisions as to what is required. Many leases require you to obtain the consent of the freeholder in advance and you are likely to have to pay the freeholders costs. Again if this is an issue make sure you check and make enquiries of your freeholders.
The other thing that people often make assumptions about is what they are buying and rights they have over communal areas and grounds. Again it is best to check to make sure you are getting what you thought such as parking spaces and garages. Just because there is for example a garden does not automatically mean you will have right of access. Things like this should be explained to the lawyer who can check. Remember if you do not ask you may not get an answer!
This article provides an overview of what practically can be the important points for someone buying. Leases are often complex even for lawyers and so do not be afraid to ask. It is vital that you do understand this document since even in blocks where leaseholders own a share of the freehold you are required to comply with your lease.
Source - http://blog.painsmith.co.uk/2012/05/24/beginners-guide-to-long-residenti...
Kate Boyes BSc (Hons) FARLA MRICS
Partner in charge of Residential Lettings
Kate established Alexandre Boyes Residential Lettings in 2003 and Alexandre Boyes Estate & Block Management in 2007. Collectively the departments are on target to manage c.1000 units by the end of 2013 and Kate is fiercely proud of the reputation both teams have in Tunbridge Wells.
Kate has a first class honours degree in Land Management from the University of Reading and trained at Nelson Bakewell (now Capita Symonds), a Property Consultancy, in London. She qualified as a Chartered Surveyor in 2004, and is a Fellow of ARLA.
Kate personally looks after a group of premium estate management clients, and is often called in as a consultant to new clients advising on complications in freehold acquisitions, accounts, planning and lease drafting, and has particular experience in listed buildings.
Kate has a young family and lives in Tunbridge Wells. When she isn't working (which is not very often!) she can be found enjoying a glass of red wine at Sankeys or spending time with her three children at home in Langton Green.
