Purchasing or selling a leasehold property can be a stressful process with various types of problems arising during the transaction if not handled/ managed correctly. Brady Solicitors’ conveyancing specialist Lesley Brentnall identifies eight of the more common issues that can occur.
The first step when looking to purchase or sell a leasehold property is to ensure you are using an experienced conveyancing team…and the cheapest option isn’t always the best as experience suggests. Though, you may ask why you should pay someone more money to do the job – in truth leasehold properties can be a complex matter for the inexperienced and unwary; if not handled correctly can become very costly, resulting in you paying out more than initially intended.
Bradys’ specialist conveyancing team have compiled the list below showing just some of the common pitfalls of leasehold transactions, making you aware of possible issues that could go wrong and what to look out for when buying or selling a flat.
1. Service charge arrears incurred by the previous owners of the property
Being chased incessantly for a previous owner’s service charge arrears is nobody’s dream, especially as it can result in CCJ’s being issued in your name even though you were not the defaulting party.
2. Deterioration in the maintenance of the estate
Lack of service charge collection from existing tenants understandably leaves the landlord with insufficient funds to maintain the estate as services may be withdrawn, which can have a negative effect on your home environment and make selling your property difficult.
3. Unexpected large items of expenditure
When purchasing a new flat or leasehold property, it’s vital that your conveyancing solicitor conducts a thorough investigation of any proposed works to avoid any nasty service charge surprises further down the line.
4. Lease drafting errors
Careful review of the lease is required before signing on the dotted line, one key question to keep in mind is has the lease been correctly drafted in the first place to ensure that your payment contributions are towards items which are deemed fair and reasonable? Drafting errors may mean that you are unable to sell your property due to you being responsible for areas of the estate which you do not use and that weren’t previously highlighted at purchase.
5. Insufficient length of the term of the lease
It is important that you are aware of the term remaining on the lease as most lenders look for a minimum number of years; usually 35-40 years on top of the length of the mortgage. And even if you are a cash-buyer beware of the lease length or you could have problems when you come to sell the property. Although there are mechanisms to acquire a lease extension, these can be costly – particularly where a lease has less than 80 years to run.
6. Issues with the Residents- Owned Management Company (RMC)
Be sure that if the property is managed by an RMC that it has sufficient and effective directors and that returns are lodged at Companies House efficiently. Arguments and bad feeling between leaseholders can ultimately affect the management of the building.
7. Freehold ownership issues
The freehold owner may be a third party landlord or an RMC – occasionally the freehold can be owned in the names of the other leaseholders in the block. This can create problems as every time a property in the block changes hands all of the other owners need to join in to transfer their interest in the freehold – what if one of the owners does not want to sign or is away or incapacitated? We have seen instances where the transfer of the freehold is simply overlooked and you then have the rather bizarre situation where the freehold is partly owned by someone who used to live in the block but no longer does – can that person be found and what if they can’t?
8. Changes made without landlord consent
Ensure that any changes to the flat have been given the appropriate consent from the landlord as this can cause various issues when you as the owner wish to sell the property.
Find out more
For help and advice with buying or selling a leasehold property please contact Brady Solicitors’ team of specialist conveyancing solicitors’ on 0115 985 3450 or by email.