At Capron and Helliwell we note that there has been a lot in the news recently concerning problems with leasehold properties. Specifically, what does this mean for you as a buyer? There have been instances where purchasers of flats have been surprised to learn that their flat has rents and other charges due even after paying the purchase price. This is especially alarming where some ground rents increase dramatically at regular intervals.
Often, we find people do not know the difference between a freehold and a leasehold property or what this entails.
A freehold property is one that you own outright. A leasehold property is one that you own only for a set period of time and, strictly speaking, have to give back once that time period has elapsed. This set period is normally set out in a lease or other formal document.
If you own a freehold property, it is very unlikely that you will be required to pay rents/maintenance charges to another party. There are exceptions to this such as some retirement, shared ownership properties and on new estates.
If you own a leasehold property, however, you are very likely to have to pay ground rent (i.e. an annual sum) and variable maintenance charges on a regular basis. As you will have to give back the property, the Landlord will want you to contribute towards the maintenance not only of your property but also the rest of the block/estate as a whole. Ground rents should always be clearly defined in your lease or other formal document. This document should also set out whether the Ground rent is fixed (i.e. £250 per annum) with no increases or whether there is a mechanism for the Ground rent to increase. Problems often arise where the terms for increasing a Ground rent mean that towards the end of a set period of years it is simply extortionate in comparison with how many years are left to go! Some older leases often increase the ground rent by doubling it every few years. It is easy to see how such Ground Rents can quickly escalate out of control.
When buying leasehold property always make sure to ask your legal advisor about the original term of years of the lease, the remaining term left and what payments you as the leasehold owner are required to make on a regular basis.
If you have a legal matter involving either leasehold or freehold property, please contact Capron and Helliwell your local firm for specialist advice.
This article was written on 13 September 2019 and the law may change following this date.
This article aims to supply general information but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek specific advice.
Capron & Helliwell Solicitors offer a range of legal services at the firm’s Stalham and Wroxham offices near North Walsham and Norwich in Norfolk. The firm specialises in areas including conveyancing and private client law including wills and probate. Capron & Helliwell Solicitors offer fixed fee family law clinics – please call 01692 581231 for further details or to make an appointment.