There is always a lot of information on the internet warning you about buying a leasehold property so here is a guide as to what the difference is between leasehold and freehold and why leasehold ownership makes sense for some types of properties.

The main differences between freehold and leasehold are as follows:-

1. leasehold you do not own the property you in fact lease it for the  number of years stated in the lease  (there is however a statutory right to extend this);
2. you will  frequently have to pay rent to the landlord;  
3.  you will frequently have to pay service charges to cover for the maintenance of shared facilities such as shared gardens , lifts and any other communal areas within the building ;
4. the lease will provide rules as to how the tenants must or must not act  for example not to keep any pets or play loud music. If these rules are breached ,  it is possible for the landlord to forfeit the lease which  would result in you losing your property;

So why have a leasehold property? If the property you are buying is a flat then leases provide important rules and rights for the tenants such as rights of support from the other flats and the building or rights of way over the stairs. The lease  should also  provide that all the flats  are be regulated in the same way i.e. the same policy on pet s  being  kept in the flat . 

Some estates are sold as leasehold properties for example if there are common areas and so the residents all pay to the upkeep of the landscaped areas.

There are lots of occasions when a property should rightly be leasehold.

It is important that you instruct a solicitor who specialises in leasehold property so that they can advise you fully on the terms of the lease to make sure that it is suitable for you.

The benefit you have with instructing Fidler and Pepper is that we offer a no sale no fee so if something comes up with the lease that means you do not wish to proceed you will not have to pay our legal fees ( you will still have to cover the payments for disbursements such as searches).

If you do wish to obtain a quote for buying or selling a leasehold property please visit we would be happy to provide you with a fixed fee quote.

As a property lawyer there is a tendency to forget that clients do not have the same depth of knowledge as myself so I have taken it upon myself to produce brief guides on the basics.

I deal predominantly with residential and commercial lease and there are many different types of

transactions that involve leasehold elements.

Concentrating on residential leases, you can purchase either a leasehold flat or house although leasehold houses are not as common as flats.

Some shared ownership schemes incorporate leasehold elements to allow you to get on the housing ladder with the owner taking a lease over the property with the housing provider retaining the freehold of the property.

Essentially, when you instruct a solicitor for a leasehold transaction this will fall into the following main categories:

1.    Leasehold Sale; or

2.    Leasehold Purchase; or

3.    Shared Ownership scheme purchase.

I have drafted separate blogs detailing the specifics of what is involved in each the 3 options above so please view them on the Fidler & Pepper website. Alternatively contact me directly on 01623 451111 or email on wjames@fidler.co.uk

As a property lawyer I often get asked similar questions so thought it would be a good idea to publish a guide surrounding the most common type of questions.

One common question is what actually is a leasehold property?

The majority of houses that are bought and sold in the UK are either leasehold or freehold properties.

The majority of leasehold properties are flats which may be in purpose-built blocks, converted houses or part of commercial or retail premises.

Leasehold houses are much rarer but are often in a street or development of houses which all come under the same freeholder. In the case of houses, many owners have since bought the freehold

A leasehold is basically a very long tenancy or right to occupy a property for a defined amount of time. You own this right rather than the bricks, morter and land that the property stands on.

Leasehold properties may be owned by either individuals or companies, viagra soft and sometimes by housing associations or local authorities.

With a leasehold property there is always a freehold title that the leasehold title has been granted from. The freehold title will be owned by the freeholder or landlord. There will be a lease document governing the relationship that the tenant has with the freeholder. Please see other topics in the frequently asked questions for more information on this.

The Freeholder is generally responsible for the maintenance and upkeep of the building.

If you are considering purchasing a leasehold propety and want some further advice or indications of the likely cost associated with this, please drop me a line on 01623451111 or email me at wjames@fidler.co.uk 

Many of the clients that we get through the Fidler and Pepper door who are purchasing leasehold property are not aware of the additional requirements that they have when they purchase leasehold property. In particular the fact that they have to pay service charge and ground rent and who they have to pay it to.

As a leasehold flat owner, you usually own and are responsible for the maintenance of everything within its four walls, including floor boards and plasterwork, but not usually the external or structural walls.

The landlord, who can be a person, a company, a local authority or a housing association, owns the structure and common parts of the building and the land it stands on and is responsible for its maintenance.

Some landlords carry out the management of the property themselves but many appoint a

managing agent to manage and maintain the building on behalf of the landlord in accordance with the terms of the lease, current relevant legislation and codes of practice

The agent takes instruction from the landlord, not the leaseholders, but should be constantly aware of the leaseholders’ wishes and requirements. The agent will receive a fee which is usually paid by leaseholders as part of the service charges.

If there is a problem with management services, the leaseholder’s argument is not with the agent but with the landlord, who has ultimate responsibility for the full and proper management of the property

If you have any questions in relation to the above or are considering purchasing a leasehold flat and want advice in the conveyancing of this please drop me a line on 10623451111 or email me direct on wjames@fidler.co.uk.

Further to my last blog on the benefits of installing solar panels on your roof and renting out the roof space there has been some futher developments.

The Energy Savings Trust (“EST”) had previously estimated the savings to households at around £120 annually but recent investigation by the EST has shown savings to be significantly less.

This could have an impact on the schemes (as mentioned in my previous blog) where you rent out roof space in return for all the electricity you can use as householders may now be reluctant to lock the property into a scheme where the savings are not that significant.

In addition the estimates that are provided do not always take into account the area in which the panels are going to be installed. This is further backed up by a Which investigation which confirmed that careful consideration should be given when calculating how long it would take for the system to pay for itself.

More than 28,000 households installed solar panels in the last financial year, with the number growing by 1,000 homes each week so there is still clearly market for this type of product and scheme.

The key factor is for many people schemes such as the above can be mutually beneficial but time should be spent working out the figures before you take the plunge.

Should you have any questions in relation to this blog please contact me on wjames@fidler.co.uk or alternatively 01623 451111

A ray of sunshine in a gloomy depression?

I have had a couple of enquiries through recently about companies approaching home owners to talk about providing them with free electricity. It’s rare these days for a company to offer anything for free so what’s the catch?

Essentially the government is encouraging the use of renewable energy and with powers under the Energy Act 2008 it has introduced a system of feed-in-tariffs to incentivise small scale low carbon electricity generation.

Basically if your home generates energy through solar or wind power you will be entitled to payments under this feed-in-tariff. This is payable whether you use the power or not. You get money just for generating the electricity in the first place! In addition you can use the electricity to reduce your bills and the energy that you do not use can be fed back into the grid, which you get paid for as well.

Sounds to good to be true? Well yes it is. The installation costs for a PV or solar panel system can range between £10,000 and £15,000 depending on its size. For the vast majority of us this is simply too much.

This is where the companies mentioned previously come in. They will pay for the system, install it free of charge and allow you to use all the energy that is generated. What they want in return is the payments made for the feed in tariff and this is where the catch comes in.

You will be asked to grant a lease over your roof and air space above your property for up to 25 years.  The implications of this will be that a leasehold title will need to be created over your (normally) freehold property. This will almost certainly have implications if your property has a mortgage and in these circumstances the Lender’s permission will need to be obtained. Secondly it may affect the marketability of your property making it more difficult to sell. You will also want to consider what happens if you want to extend into your loft or repair works need to be carried out to the roof of the property.

If you have been approached with a scheme similar to the above and want advice in relation to it or you are a company thinking about offering this type of product and want help setting up the legal aspect of the installation please contact me on wjames@fidler.co.uk to discuss in more detail.

Cheers

William

As a solicitor I sometimes fall into the trap of assuming that everyone knows the basics of Leasehold and Freehold properties which is not always the case. In light of this I have prepared a brief guide to the basic differences between the two.

The majority of property in the UK is either held as Leasehold or Freehold. The major difference between the two is that with a leasehold property you own a ‘right’ to occupy a specified piece of land for a specified amount of time. With a Freehold property you own the land or property outright which is not usually subject to the above restrictions. In addition with freehold you actually own all the land directly below your property, and the sky above your property; with leasehold you can own a ‘chunk’ of property – for example a specific flat.

The length of the lease can be any amount of time but typically ranges between 99 and 125 years.

Leaseholds are usually used in relation to some form of flats or apartment. The reason that flats are usually leasehold is that they are usually reliant upon each other for support and shelter (e.g. the top flat will also own the roof, the bottom flat will own the foundations, and all the other flats own their walls. All of the flats rely on each other for support). Because of this mutual need for support you want to make sure that if one flat is letting an important part fall into disrepair, then the others can force them to do something about it. Because of the way property law has formed, it is much easier to do this if they are all leases than if they were all freehold. Hence most flats/apartments are leasehold.

With a leasehold property you enter into a lease with the Freeholder (the person who owns the freehold – yes there’s still a freehold – there’s always a freehold) or Landlord. This is essentially an agreement governing the Tenants relationship with the owner of the land and details what you can and cannot do. The important thing to remember with leasehold properties is that you are restricted in some aspects of your use of the property unlike Freehold properties where you are relatively unencumbered.

For larger blocks of flats there will quite often be a management company which looks after the property on behalf of the Freeholder.

Leasehold properties normally have a ground rent payable. This can be a peppercorn rent (a nominal amount that is quite often not even collected) or several hundred pounds a year. In addition the Freeholder (through the management company) will often collect service or maintenance charges. These charges are for the maintenance of the building and communal areas as well as insuring the property.

A leasehold property is a diminishing asset – i.e. as the length of the lease is reduced below a certain length then it’s value decreases. This actually does not happen until a lease is reduced to about 60 years. When a lease reduces to this level it is usually a good idea to extend the lease or in some circumstances purchase the Freehold – see my separate blog on this.

If you have any questions about leasehold properties or are considering purchasing a leasehold property please get in touch by email or by leaving a comment on this blog.

William

A lot of my clients ask when buying a leasehold property what the service charge and ground rent actually is and what it is for?

Let’s be clear ground rent and service charges are not the same thing.

Ground rent is the money that you pay as a leaseholder to the Landlord or Freeholder for basically renting the land that the leasehold property sits on. This is usually a fixed sum and is paid annually.

The service charge is payment for all the services (such as maintenance of gardens and communual areas) that you as a leaseholder will use but will not be specifically responsible for. This will often be an estimate of what the landlord will anticipate will be for the forthcoming year.

Quite often this will be collected through a management company on behalf of the Landlord or Freeholder.

Under the terms of the lease you will be responsible for paying these amounts.

When purchasing a leasehold property your solicitor will investigate whether the ground rent and service charge has been paid up to date and ask questions such as whether it is likely to increase in the coming year. On completion of your purchase your solicitor will ensure that all arrears have been paid and that you will not be responsible for debts incurred not during your ownership.

If you have any questions about Ground Rent or Service Charges please get in touch by email or by leaving a comment on this blog. Or if you need a leasehold conveyancing quote then use our on-line quote system