Many people are aware that properties in England and Wales will fall into one of two categories – they will either be freehold or leasehold.
Freehold transactions are traditionally seen as the ‘simpler’ of the two categories, and for good reason. When dealing with the sale or purchase of a leasehold property, solicitors have to deal with all the issues that would be present in a freehold transaction, plus some added elements, including all of the following.
I will not go into all the intricacies of a lease in this short article, but will highlight a major issue which is a common delay in the transactions that we deal with.
This is the length of years that a lease is granted for. Typically leases are granted for 99, 125, or 999 years although technically they can be granted for any length of time. We are not particularly concerned with the upper limit of these lease lengths, but the shorter the lease, the more likely there is to be an issue. Once a lease falls below 80 years in length, there are significant costs involved in extending that lease, so if a lease is at 85-90 years in length we will be advising our clients that they are likely to need to extend that lease shortly. Some mortgage companies have specific requirements in relation to the remaining number of years on a lease and we have to ensure that the lease you are purchasing complies with these requirements too.
In a leasehold property transaction there will be a freeholder or a management company who will often deal with the day to day management and maintenance of the building. They will collect the ground rent (a yearly payment) and the service charges from the tenants to recoup any money they have spent maintaining or insuring the building.
In these cases, the landlord or management company (or occasionally both) must be contacted as early as possible in the transaction so that they can provide up to date statements and documentation in relation to their management, so that the buyer can see full information about the costs which they will be subject to upon moving in.
If you would like more information please contact Bradley Armorgie 01223 447415 or click here
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