Residential Conveyancing



Is the Property that you want to buy Leasehold or Freehold? A Property that is Freehold is owned outright by the owner.  On the other hand the owner of a Leasehold Property owns the Lease but only for the unexpired remainder of the Term granted by the Lease and at the end of this period the ownership of this Property reverts back to the owner of the Freehold estate.

Here are 10 reasons why Leasehold Conveyancing is more complicated and so is likely to take more time than Freehold Conveyancing:

1. Your conveyancing Lawyer needs to read the Lease

The Lease is a complex document that has to be checked on behalf of the Buyer and if the Buyer is getting a mortgage, the Solicitor also has to work on behalf of the Lender to ensure that the Lease meets with the Lender’s requirements. There is a lot of important information in the Lease.

2. What is the unexpired term of the Lease?

As a general rule, the longer the unexpired term of the Lease the more your asset is worth.

Many Mortgage Lenders will not lend on a Lease that is under a certain number of years. Often where the unexpired term is 70 years or less, the Solicitor will be obliged to notify the Lender and await confirmation that they will still lend.

It is possible to extend the Lease, but you will have to pay a premium to the Landlord as well as legal fees.

3. You need to know who owns the freehold

Is it an individual or a company? Your Solicitor will need to request information from them and this may take time.

You will need to know who to pay the Ground Rent to, and who is the Landlord’s Agent.

In a block of flats, usually each has a Lease and the communal areas e.g. stairs, entrance hallway and garden are retained by the owner of the Freehold.  As the owner of the Freehold has these responsibilities you need to know who they are.

4. Is there a Management Company?

Sometimes, the owners of Leasehold properties get together and buy the Freehold and then form a Management Company to take care of the upkeep and insurance of the Property.  It might be that the company is limited by shares and so they will each have shares in the Management Company.  If this is the case, the company documents should be checked together with all the accounts and the share(s) must be transferred on Completion.

5. Know your legal obligations

A Lease contains covenants.  These are promises that the parties to the Lease are obliged to fulfil.  For example to keep the property in good repair, paint the inside or the property every 3 years or to pay the Service Charges

The Buyer must be aware that on Completion, he/she will take responsibility for the Covenants in the Lease.

The Landlord may also be required to give Covenants but invariably these are minimal.

6. How much Service Charge will you have to pay?

Your Solicitor will have to contact the owner of the Freehold and find out what the current monthly service charge is and will also check that the Seller has paid it up to date.  The Solicitor should also ask if there is any major work planned e.g. repair of the lift, and whether or not there are funds available for this expense.  It is usually advisable to look at the expenditure of the Management Company or Freeholder over the last 3-5 years and to see if there has been any major expenditure or any debt incurred. This information should be passed onto the Buyer so that they can budget.

7. Who is arranging the Buildings Insurance Policy?

The owner of the Freehold/Management Company insures the building and usually there is a covenant in the Lease obliging the Lessee to pay their portion of the sum.  The Solicitor will need to check that there is buildings insurance, the terms of the policy and what it covers, and of course that the premium has been paid.

From a practical perspective, it is unlikely that the Buyer will be able to purchase buildings insurance for just one flat within a block of flats from an insurance company. Insurance ultimately protects your asset and the asset of the Freeholder.

8. The Buildings Insurance Policy must also meet the requirements of the Lender

The Lender will expect their legal representative to check the details of the buildings insurance policy carefully to protect their loan.  If the policy deviates from their specific requirements, then the Lender will have to be notified and will have to confirm that they will lend.

9. Consent from the Freeholder to sell

Does the Lease state that the owner of the Freehold needs to give consent to this sale.  If so, a licence may need to be prepared and a fee paid.

10. Are there any Disputes?

Your Solicitor will try and find out if there are any disputes between neighbours, the Landlord and or Management Company.

For further advice regarding Leaseholds, or to discuss your case, please contact Anne Lockwood through the online enquiry form or telephone 01564 777250