A lot of property owners in England and Wales have a leasehold property. However, most people have no idea what this actually means. Here are some of the frequently asked questions about leasehold properties.
1. What is the Meaning of a Leasehold Property?
Let’s say you have found your dream home but it’s a leasehold property. Well, here is what you need to know. Unlike freehold properties where you own the home immediately, you will only have exclusive ownership of the property during the period of the lease. It might be anything from a decade to a century, depending on when the lease was first initiated.
2. What Is Ground Rent and Do I Have to Pay It?
Ground rent refers to the amount you will be paying to the landlord as a leaseholder. It can vary depending on the lease agreements. There are cases where the ground rent can increase over a short while. Consult your solicitor on this case for the best advice. You need to know early enough about the total amount for the ground rent. You should also confirm whether or not it changes and the consequences of such changes.
3. Are There Any Service Charges After Buying a Leasehold Flat?
Yes, you need to set aside some cash for this purpose. Service charges come up for the maintenance cost of the building. It also comes up because of the communal areas and services. The charges are prior payments usually done annually. Note that, the amount varies depending on the building, the current condition and the age.
4. How Will My Leasehold Property Be Maintained?
Once you purchase a leasehold, you immediately become a leaseholder and you should consult land registry services for a leasehold registry plan immediately. Just like a tenancy agreement the lease has laid out your rights and obligations. The landlord is the freeholder and has their own rights and obligations written in the lease. Just like any other building, the block with the flats needs both external and internal maintenance. The building might also have communal heating and elevators that require maintenance. The landlord (freeholder) is responsible for these maintenance issues. The cost might be passed to you (leaseholder) through the service charge. The landlord will hire property managers to manage the building on his behalf.
5. How Can I Check the Fire Risks Where I Am Buying the Leasehold Property?
You can do this by reading the fire risk assessment for the building. Your solicitor should ask for a copy of this document from the property manager. Note that, all the flats in England and Wales are required to have a frequent fire safety risk assessment.
6. How Can I Alter a Leasehold Flat After Buying It?
Some leases ban any alterations on the leasehold property but some allow it as long as you have obtained the necessary consent. Other properties don’t have any restrictions altogether. Before making any alterations, you should check if you need the landlord’s consent, but in a lot of cases, landlords are happy to permit alterations which will benefit the property, like installing lantern roofs in a flat roof. However, you might be forced to approach the property manager first before talking to the landlord in some cases.
7. Can I Sub-let a Leasehold Property After Buying It?
It depends on the lease. Some leases don’t allow sub-letting while others require consent. In some cases, they are silent without any restrictions on sub-letting. In this case, you can check with the landlord to confirm the restrictions in place and the conditions for sub-letting.
8. Can My Leasehold Expire?
Just like any tenancy, a lease also has a beginning and an end date. You need to know how much time is left on the lease before you purchase. That’s because as the lease period becomes shorter, you will have a harder time selling the property. You can extend the lease after two years of owning the property but you need to pay the freeholder for this. However, the payment is dependent on the period left on the lease. You have some rights to live in the property once the lease expires but in this case you need to pay the market rent prices.
That’s what you need to know about leasehold property and the various rights awarded to you!