When purchasing a leasehold property, your conveyancer must take additional legal steps before you can legally take ownership. This is because you will be sharing property ownership with the freeholder. The following guide outlines the legal process for leasehold properties in England and Wales.
What's Included?
Conveyancer checks
After your offer on a leasehold property has been accepted, the seller’s solicitor will send a draft contract pack to your conveyancer. This pack should contain all the necessary details about the lease, such as its duration and any written terms and conditions.
Your conveyancer is responsible for thoroughly examining the lease and informing you of any obligations or rights you have under the lease. They will also determine any charges that may apply to you.
As a leaseholder, you may be required to pay ground rent and service charges. Before taking over the property, your conveyancer will check with the freeholder to ensure the previous leaseholder has paid all outstanding charges. Additionally, your conveyancer will investigate if there are any disputes between the current leaseholder and the freeholder, such as disputes over repairs not being carried out by the freeholder.
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SEE MOREYour conveyancer will investigate if there are any upcoming property improvements for which you may have to bear the expenses. For instance, if you plan to purchase a leasehold apartment, the landlord may need you to contribute to re-carpeting and painting communal spaces scheduled in a few years.
When purchasing a leasehold flat, you must obtain a copy of the block buildings insurance policy from the freeholder or their managing agent and give it to your conveyancer. Your conveyancer will inform you about the responsibilities of the freeholder, including the upkeep of the building’s structure and exterior.
How long is the lease?
If your lease is for 80 years or less and you plan to stay in the property for a while, your conveyancer may want to check if you can extend the lease or buy the freehold in the future. You can only extend the lease after owning the property for at least two years. Most leases last between 99 and 999 years.
Suppose the property you want is owned by leaseholders who have bought the freehold together and established a management company. In that case, your solicitor must examine the company’s records and arrange to transfer shares to you. Recent proposals have simplified the process of extending or purchasing leases for leaseholders.
It is important to remember that buying a property with a lease of less than 70 years may lower your chances of being eligible for a mortgage. This is because many lenders require a lease of at least 80 years or longer. The rationale is that selling properties with shorter leases in the market can be harder.
Other enquiries
Your conveyancer will need to perform standard property searches, such as Land Registry searches, local authority searches, environmental searches, water authority searches, and location-specific searches, in addition to the checks already mentioned. This applies to any property purchase, whether it is leasehold or freehold.
This is done to determine if any changes to the property follow building regulations and if there are any potential concerns in the surrounding area, such as the construction of a new road.
If your lawyer has any questions, they will contact the seller’s conveyancer and request clarification on any unclear information.
The conveyancing costs for purchasing a leasehold property will be higher than for a freehold property due to additional checks required. You should also expect a long legal process that can take around 12 to 14 weeks or sometimes even longer.
Frequently Asked Questions
1. What is leasehold conveyancing?
Leasehold conveyancing is the legal process for buying or selling a leasehold property. All homes are owned on either a freehold or leasehold basis. Freehold means you own the building and the land it stands on outright. Leasehold means you have a lease from the freeholder to use the home for a set number of yearsĀ³.
2. What are the extra checks that need to be made when buying a leasehold property?
When you buy a leasehold property, you will go through the same process as if you were buying any home, but your solicitor or conveyancer will have to make some extra checks too. These include: The length of the lease ā how long is remaining and does it need to be extended?Ā¹
3. Why does it take longer to buy a leasehold property?
It takes longer to buy a leasehold property because your solicitor or conveyancer will request a Leasehold Management Pack which includes historical management accounts, ground rent and service charge accounts and receipts of payments made, general information about the propertyĀ².
4. What are some other enquiries that need to be made when buying a leasehold property?
Your conveyancer will need to conduct all the usual searches associated with any property purchase, whether it is leasehold or freehold. These include Land Registry searches, local authority searches, environmental searches, water authority searches, and location specific searchesā“.
5. What is the Conveyancing Protocol?
The Conveyancing Protocol is a set of steps to follow when acting in the sale and/or purchase of a home for an owner-occupier. You can use the protocol in residential transactions of freehold and leasehold property. The protocol is not designed to be used in the purchase of new build homesāµ.
6. How long does it take to complete a leasehold conveyancing process?
The time it takes to complete a leasehold conveyancing process varies depending on several factors such as how long it takes for your solicitor or conveyancer to receive all necessary documents from third parties such as management companies or freeholdersĀ¹.
7. What are some common issues that arise during leasehold conveyancing?
Some common issues that arise during leasehold conveyancing include: missing documents such as share certificates or insurance policies; disputes between neighbours; disputes between landlords and tenants; disputes between management companies and residents; and disputes over service chargesĀ¹.
8. What is a Leasehold Management Pack?
A Leasehold Management Pack is a collection of documents that your solicitor or conveyancer will request from the freeholder or management company when you are buying a leasehold propertyĀ².
9. How much does it cost to buy a Leasehold Management Pack?
The cost of buying a Leasehold Management Pack varies depending on who provides it and how much information is included in itĀ².
10. How can I extend my lease?
You can extend your lease by contacting your landlord or freeholder directly or by using a specialist solicitor who can help you negotiate an extensionĀ¹.
References:
(1) Leasehold conveyancing: Fees, process and how long it takes. https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/leasehold-conveyancing/.
(2) Buying A Leasehold Property – HomeOwners Alliance. https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/buying-a-leasehold-property/.
(3) Why Does it Take Longer to Buy a Leasehold Property? – Co-op Legal Services. https://www.co-oplegalservices.co.uk/media-centre/articles-may-aug-2016/why-does-it-take-longer-to-buy-a-leasehold-property/.
(4) Leasehold properties and the conveyancing process – L&C Mortgages. https://www.landc.co.uk/mortgage-guides/buying-leasehold-property-conveyancing-process/.
(5) Conveyancing Protocol | The Law Society. https://www.lawsociety.org.uk/topics/property/conveyancing-protocol.
