If you are considering buying a Leasehold flat or already own one but are baffled by the laws and regulation in the industry, let us help by explaining a few facts about owning a Leasehold flat and the Leasehold industry in general.
There are over 5 million Leasehold properties in the UK.
When you ‘buy’ a Leasehold flat, you are in fact only purchasing the ‘right to occupy a space’, with that space being defined in your Lease.
The land the building is on is called the Freehold. It is possibly for a Leaseholder to have a share in that Freehold land.
The Freeholder can be a person or a company. You can find out who your Freeholder is via the Land Registry.
Your Lease will last a set period of time with the average being 125 years from the first purchase.
Your Lease will require you to pay a contribution of the building maintenance costs to the Freeholder.
Responsibility for the upkeep of the building is on the Freeholders shoulders, this includes legal compliance and health & safety.
You will be contractually obligated to keep the inside of your flat in good order however, at your own cost.
You may have to pay a ‘Ground Rent’ amount to the Freeholder every year on top of the maintenance costs.
The amounts you pay are set out in your Lease, typically based either on the size of your flat or split between the amount of flats in the building.
Your Lease decreases in value as the length of time left on your Lease decreases.
You can extend your Lease for 90 years however, formally applying to the Freeholder and negotiating the price.
Leaseholders do have significant rights (check out our blog on all of those here)
If your Lease runs out of time, you must leave the property or renegotiate for a new Lease with the Freeholder
There is the Leasehold Advisory Service (website here) to help Leaseholders with free, independent advice.
If you do not keep up service charge payments, you may lose your right to occupy your flat.
You may have to pay a fee to your Freeholder to rent out your Leasehold flat.
Typically every 5 years you will have to contribute towards major re-decorations / repairs to the external of the building.
You can organise a ‘Right to Manage’ company or ‘Residents Association’ to get more responsibility in the running of the building.
You have the First Tier Tribunal: Property Chamber (formerly the Leasehold Valuation Tribunal) as a legal avenue of problem resolution.