Should you be worried if you are buying a lease or a leasehold property?
Understanding the difference between freehold and leasehold can be confusing to buyers. And the distinguishing of titles in land dates back centuries, which is why it is so difficult to grasp. It was first introduced after the Norman Conquest in 1066 by King William as a way of retaining ownership of property; while allowing others to live and work the land under a leasehold occupancy for an annual rent over a specified number of years.
Fast forward to 2014 and many buyers still worry as to whether they are paying hundreds of thousands to buy something which doesn’t actually belong to them – and whether this make it worth less than a freehold property.
The answer is it depends
It depends on the length of your lease and the obligations and rights that exist or are missing from your lease. Get your solicitor to check the lease for you but try to instruct a solicitor who knows leases. Going with a lease expert will save you money in the long run as they know how to spot defects in the lease and will advise you accordingly. For example, highlighting a defect in your lease means you have time to vary the terms before you purchase.
You must also read the lease and ask your conveyancing solicitor to answer any questions that you may have. A.V.Rillo reviews their client’s lease as soon as it is received and prepares a special report – notifying their client of any defects with solutions the buyer may wish to consider to: Changing the lease or to purchase as is, at the right price of course. Either way, it’s important to know the facts as the currently stand in the lease and to make informed decisions throughout the process.
Obligations under your lease
An expert lease solicitor will also review the obligations you have under the lease to the freeholder or landlord as well as the freeholder or landlord’s obligations to you (called covenants). Your solicitor should ensure that your freeholder has the obligations imposed on them that you want them to carry out. For example, the covenant on the landlord to repair, maintain and insure the exterior of the property and common parts. These are just some of the obligations that you need to ensure exist. Your solicitor must also ensure that you have certain easements (i.e. rights) over the property such as the right to common services such as electricity and water pipes. Again, these are just few of the easements your solicitor must help you ensure a detailed in your lease.
When do you ask your solicitor about your lease?
As you as your agent asks you to instruct a solicitor on your purchase, you should ask your solicitor to advise you on the lease. If you get it wrong, you could end up suffering financially. Try to ensure that you choose a solicitor with expertise and experience with leases and that they are on the Law Society Quality Conveyancing panel (otherwise known as CQS). This could be one of the most important decisions that you make in the purchasing process, so don’t take chances cut corners.
Ask a friend or family or your estate to recommend a solicitor. The government backed leasehold advisory service have a list of experts in your area. A.V.Rillo has been reviewed as a leasehold extension specialist, so call us or email for any guidance we will be happy to help.
Lease lengths and extensions
This is normally referred to as the “term of years”. The years vary mostly depending on when the lease was drafted. Some leases are drafted as a fixed term of 999 years, while others may be fixed at 125 years or even a few as 99 years. Remember, this is the original term of years granted but obviously the more time that elapses since the lease was first created then the fewer years you have on the lease.
Problems with a short lease
Yes, leases with a short terms of years can prove problematic. It depends on how many years you have left to run on your lease. Essentially, anything below 80 years warrants a chat with your solicitor as to whether you need to try to extend the lease before your purchase; as after you buy, you may be barred from extending the lease for two years.
If you want to find out more on how to extend your lease, then ask your solicitor or speak to our Leasehold Extension Unit at A.V.Rillo. To get things started, why not download our lease extension guide.