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Leasehold

Leasehold

Buying a flat: A Simple Guide

24/04/2017

Everyone agrees that the purchase of a house is a huge commitment. Even when you save up your life’s worth, sometimes it is not enough for a proper shelter. Rising prices often cause this in the real estate market year after year. New families have had a hard time trying to own a house. This is where flats are more popular. Flats in the UK refer to single storey accommodation with a set of rooms without the stairs. You need less budget, less maintenance and overall freedom to move if you may please. However, if you are buying a flat, there are certain things that you need to consider.

The Lease

In England and Wales, there are mainly two types of property ownership. Freehold and leasehold ownership. Flats fall under leasehold ownership as you do no completely own the land nor the building your flat is in. Flats are assigned to individuals with an agreement called “the lease”. The written contract confirms you as a leaseholder and collection of rights and responsibilities you must follow. It mentions the length of the lease and legal aspects of your ownership. Needless to say, you have to understand everything written on the agreement deeply.

Service Charge

On a flat, the landlord generally maintains the services like gas, water, heating and regular maintenance. As a flat owner, you have to pay a portion of these costs with other flat owners of the same building. There can also be sinking fund or reserves you pay each year to cover any significant repairs the building might require. While they are detailed in the lease, they can change and sometimes get unreasonable. You should not discreetly agree into variable service charges and discuss these payments personally.

Convenience

Flats are easier to find around the locations you prefer. So it helps that you analyse different aspects of the flat like distance from your work, the age of the building, security measures, convenience like a balcony, garage, elevator are things you need to consider. This inspection helps you settle in better after buying a flat. This convenience might come at a higher price but will be less stressful and make you more productive.

Managing agent

Managing agents manage the proper operation of different services in the flats. They are responsible for maintenance, repairs, insurance, and improvements. You have to discuss building and management concerns with a managing agent like broken boiler, water drainage and problems with other flat owners. As you are buying a flat, you have to check they have an active managing agent to take care of problems you might encounter.

As you will have many other concerns, you will have a better idea on which flat suits you if you visit these flats and discuss with the other flat owners. As you confirm the flat you want to buy; a conveyancing solicitor will help you guide you through the flat conveyancing process. If you find an acceptable lease, well-managed property, then there’s no reason you should not consider buying a flat.

A breakdown of leasehold extension cost

09/01/2017

Leasehold extension enables a leaseholder to increase his duration of residence in a property. Leasehold extension requires payment of fees that range from the solicitor's fees to the actual cost of the extension. All these fees add up to a given total amount of leasehold extension cost. The cost can be broken down into solicitors fees, lease valuers fees, the cost of doing research and the premium for a lease extension. Each cost has a role to play in the whole extension process.

The first person, a leaseholder, must contact is a solicitor. Leaseholder’s solicitor plays a crucial role in making leasehold extension a success. Solicitors advise their clients on possible ways of extending leases and also help in researching and documenting lease extension. A contract can be negotiated informally or through a legal framework.

Informal Leasehold Extension

The informal lease extension is when a leaseholder and his landlord agree on terms of extension by themselves without involving the law. The landlord does not get a notice of lease extension. Statutory laws of lease extension such as the 90 year extension period, zero ground rent and others are not necessarily adhered to. Informal lease extension can be cheap at face value. However, unscrupulous freeholders tend to hide subtle clauses in the agreement that will turn out to be even more expensive to the leaseholder. This is why it is important to have a solicitor help you scrutinise the lease for any hidden detrimental clauses.

Formal Lease Extension

Formal lease extension follows statutory laws of extending contracts.The leaseholder has to send a notice of lease extension to the landlord. Every negotiation is carried out within the confines of the law. A landlord cannot reject duly served notice without proper grounds. Reasons for rejecting lease extension include breach of current contract by the leaseholder. Formal lease extensions are usually more expensive than informal ones because they require the involvement of many parties. A solicitor can help you estimate the cost of either method of conveyance. A leaseholder must pay conveyance fees to both his solicitor and his landlord’s solicitor.

Solicitor’s involvement

The solicitors assist in negotiating an agreement and filing documents. The solicitors act as mouthpieces of their clients. They also settle disputes in court on behalf of their client’s. The most common cause of conflict is the freeholder’s failure to respond to the notice of lease extension. Each solicitor’s fee is usually around £1,500.

The major cost of lease extension is the premium. For a lease extension, a leaseholder must pay a premium to the landlord. The premium is calculated based on the location of the house, the current ground rent and the duration of the new lease. A leasehold valuer can give an estimation of the premium. The value of the premium must be included in the notice served to the landlord. The landlord can accept the premium or ask for adjustments. Once a premium is agreed upon, the owner should get either 10% of the premium, or £250, whichever is greater. If the landlord rejects notice for a lease extension, the leasehold can apply for a hearing in a tribunal. The landlord pays expenses for a lawyer representing him in the tribunal.