Leasehold sales, purchases & extensions
Whilst the principles concerning leasehold and freehold properties are similar, the sale and purchase of leasehold properties can bring added complications to be aware of.
Leasehold sales and purchases
Flats and apartments will nearly always only form part of the building or block and the buyer must be sure that the building is being properly managed and maintained. If something should affect the flat in question, it is important that there are appropriate procedures and remedies in place to rectify the situation. This usually means contact with the owner of the block, or their agent, to obtain independent information such as rent, service charges, insurance etc. Information concerning any forthcoming repairs to the block, which in turn may increase service charge payments, should also be ascertained.
Historically, with leasehold transactions, waiting for such information is often a common source of delay. We therefore make a point of taking steps to deal with management enquiries as early as possible whether acting for buyer or seller.
When buying or selling leasehold property it is crucial to take time to look at the lease in some detail before proceeding too far. Some leases contain stipulations which apply when a flat owner wishes to sell, such as forbidding a sale without the freeholder’s consent. In the case of retirement flats there may be provisions requiring additional payments to be made to the freeholder on sale, or for a prospective buyer to meet certain age limits or be able to demonstrate that they are capable of living independently. Naturally, problems can occur later on when such issues are not identified before a transaction is agreed.
An increasingly common problem relates to the length of time remaining on a leasehold term and this should be checked before embarking on a sale or purchase transaction. Trying to agree the terms to extend a lease during the course of a sale and purchase is not really a practical option.
For these reasons and many more, we believe preparation is key and regularly advise our clients before they commit to the sale and purchase of leasehold property to ensure transactions are undertaken smoothly.
Where the term left on a residential lease is diminishing, a future sale or mortgage may become difficult unless the lease is extended.
Provided they meet the relevant tests, statutory provisions allow owners of residential properties to claim a right, upon payment of an agreed purchase price or premium, to extend their remaining leasehold term. Often specialists need to be consulted to assist with establishing the price to be paid for the lease extension.
The statutory procedure can be complex and so we recommend clients seek our advice at the earliest possible stage to ensure that lease extension issues do not delay plans.
Our team can advise you on:
- Leasehold purchases & sales
- Stamp Duty Land Tax
- Land Registry formalities
- Leaseholder & freeholder obligations & requirements
- Retirement properties
- Lease extension procedures, formalities & valuations