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What is a Leasehold

Many people often ask – What is a Leasehold?

Leasehold conveyancing is much more complicated than Freehold conveyancing. If you ticked the Leasehold box when applying for your quote then the additional conveyancing fee for dealing with the leasehold is included in the conveyancing quote. Your solicitor must check that the Lease for the property has been correctly drawn up and that it does not include terms that would be unfair to you or unacceptable to a mortgage lender. A lease is typically 60 – 100 pages long and will usually include a plan of the estate including the common areas such as garages, driveways etc. and a floor plan of the leasehold property. All these must be checked carefully.

As most leasehold properties are in a block of several flats or maisonettes they are often run by management companies or tenant’s associations. The solicitor must check that any management company or tenant’s association is properly formed and that the running of the estate is properly managed. They do this by sending the management company or association a set of questions asking how the estate is managed and by checking the management accounts. Most solicitors will require 3 years management accounts, recent service charge statements and confirmation of payment and recent ground rent receipts.

Your solicitor must also check that the property will be adequately insured.

Note: The lease will require your solicitor to serve a Notice on the Landlord and/or Management Company confirming change of ownership and details of mortgage company. Most landlords’ charge a fee to register this notice and this fee is not included in the CMS quote because it will vary from company to company. You should budget on a sum of at least £100.00 plus VAT although it may be more or less than this sum depending on the Landlord / Management Company.

If you are selling a leasehold property the buyer’s solicitor will require information from the Landlord/Management Company. Typically as seen above this is dealt with in the form of a questionnaire. They will also require 3 years Management Accounts, Service Charge information and receipts, Ground rent information and receipts, insurance information and receipts.

Most Landlords/Management Companies make a charge to the seller for providing this information. This charge is not included in the CMS quote because the sum will vary from company to company. You should budget on a sum of at least £150 plus VAT although it may be more or less than this sum depending upon the Landlord/Management Company.

All service charge and ground rent must be paid up to the date of completion. Any sum owed by the seller will be collected by the solicitor and paid to the Landlord/Management Company on completion. The sum will be shown on the financial statement.

If the service charge and ground rent have been paid in advance by the seller then the buyer will be asked to repay any overpayment and this sum will be shown on the financial statement.

With new leasehold properties the buyer is often asked to pay ground rent and service charge in advance.

End of What is a Leasehold?

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