If you are thinking of selling or buying a leasehold property, the following may help you get through the transaction a little easier!
The first thing you must accept is that the transaction will take longer than selling or buying a freehold property. Depending whether the property is a house or a flat there are additional checks your conveyancer must carry out and information they must obtain. If your conveyancer discovers the lease is defective and needs to be varied, expect even longer delays. For example, it may be that the unexpired term of lease is unacceptably short and needs to be increased or the provision to increase ground rent is unacceptable and needs to be varied.
The next thing to be prepared for is additional expense. Whether you are selling or buying there will be fees payable to either a Landlord, Management Company and/or a Management Agent. In addition there will be fees payable to your conveyancer for dealing with their requirements. If a variation to the lease is required, that will add further costs.
It’s not all doom and gloom! Being prepared is key.
Let’s look at selling a leasehold property:
In readiness for selling a leasehold property, there are several things you can do to help ensure your sale gets off to a flying start:
- If you pay ground rent, make sure it has been paid up to date and you can provide evidence of that.
- If you pay service charges, make sure they are paid up to date and you can provide evidence of that.
- Speak to the Management Company and Landlord to check whether they have any requirements you must observe before you can complete the sale of the property, e.g. details of the buyer, obtain a Licence to Assign the lease, payment of a transfer fee.
- Speak to the Management Company and Landlord to check their procedures and costs for supplying Leasehold Property Enquiries (LPE1) which your buyer’s solicitor will require. This should not be ordered before a buyer has been found though as it may become outdated.
- Locate any correspondence received about the property while you have owned it, e.g. Landlords consent to any changes you have made, if required, information about major work required at the property, breach of any regulations and the outcome.
- Complete the Leasehold Property Information Form your conveyancer will send you as fully as possible with supporting documentation.
Having found a buyer, your buyer’s solicitors will raise enquires about the lease, these can be numerous and, depending on the lease and the title, be complex and time consuming to deal with. Some will be of a legal nature and be dealt with by your conveyancer, some will be about the property and you as the owner will need to deal with them.
Let’s look at buying a leasehold property:
Upon receipt of the lease and supporting documentation your conveyancer will review the lease to make sure it is acceptable to you and if you are obtaining a mortgage also ensure it complies with the lender’s requirements.
Your conveyancer will want Leasehold Property Enquiries from the Management Company and information from the landlord about ground rent, insurance and service charges and any major works.
Your conveyancer will check the lease accurately describes the property, provides appropriate rights, that the term of lease is acceptable and also the provisions for future ground rent increases.
Invariably the Management Company will have a restriction registered against the title of the property. Compliance with their requirements and payment of their fees will be key in obtaining their consent to comply with that restriction and allow registration of your ownership.
Your conveyancer will raise enquiries to ensure the above points are acceptable.
Some Leasehold transactions can involve complexities for example Shared Ownership and Retirement Housing which include additional requirements to be dealt with before completion.