Leaseholder FAQ’s

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FAQs for Leaseholders

We have been asked to add more information relevant to leaseholders, so we are adding these Frequently Asked Questions, reproduced from the Leasehold Advisory Service.

We will be adding more in the future, so be sure to check back here from time to time.

Please do email us with your suggestions for interesting leasehold subjects to [email protected]

Back to basics – What is a lease?

A lease is a contract between the leaseholder and the landlord giving conditional ownership for a fixed period of time (usually 99 or 125 years). It is an important document and leaseholders should ensure that they have a copy and that they understand it. Leases are usually worded in legal language and can vary from property to property.

Leaseholders who find it difficult to understand their lease should get advice from a solicitor and insist that they provide a report on its terms when they are instructed to deal with
the purchase.

The lease sets out the contractual obligations of the two parties: what the leaseholder has contracted to do, and what the landlord is bound to do. The leaseholder’s obligations will include payment of the ground rent (if any) and contribution to the costs of maintaining and managing the building. The lease will probably also place certain conditions on the use and occupation of the flat.

The leasehold ownership of a flat usually relates to everything within the four walls of the flat, including floorboards and plaster to walls and ceiling, but does not usually include the external or structural walls. The structure and common parts of the building and the land it stands on are usually owned by the freeholder, who is also the landlord. The freeholder is
responsible for the maintenance and repair of the building. The costs for doing so are recoverable through the service charges and billed to the leaseholders.

Leaseholders are not necessarily entirely free to do whatever they want in or with the flat – the lease comes with conditions, to protect the rights of everyone with an interest in the building. For example, retirement schemes will usually have restrictions on the age of those who can live there. When a flat changes hands, the seller passes on all the rights and responsibilities of the lease to the purchaser, including any future payments of service charges that have not yet been identified.

What are your contractual rights?

First and foremost, the right of peaceable occupation of the flat for the term of the lease, usually referred to as ‘quiet enjoyment’. In addition, the leaseholder has the right to expect the landlord to maintain and repair the building and manage the common parts – that is, the parts of the building or grounds not specifically granted to the leaseholder in the lease but to which there are rights of access, for example, the entrance hall and staircases.

What are your responsibilities?

Principally, these will be the requirements to keep the inside of the flat in good order, to pay (on time) the service charge as a share of the costs of maintaining and running the building, to behave in a neighbourly manner and not to do certain things without the landlord’s consent, for example, make alterations or sublet.

The landlord has an obligation to ensure that the leaseholder complies with such responsibilities for the good of all the other leaseholders. These rights and responsibilities will be set out in the lease.

I want to alter my property. Do I need to ask Swan for permission?

You should ensure that the lease allows you to carry out alterations to the property. There may be a precondition that you must obtain consent from Swan or some other party before proceeding with any works.

This means that you cannot carry out the works without first obtaining consent. Consent should not be unreasonably withheld if the alteration is an improvement. Your lease may not allow you to carry out alterations so please ensure that you check first

What is ground rent?

Because leasehold is a tenancy, it is subject to the payment of a rent (which may be nominal) to the landlord.

Ground rent is a specific requirement of the lease and must be paid on the due date, subject to the issue of a formal and specific demand by the landlord.

What are service charges?

Service charges are payments by the leaseholder to the landlord for all the services the landlord provides. These will include maintenance and repairs, insurance of the building and, in some cases, provision of central  heating, lifts, porterage, estate staff, lighting and cleaning of common areas etc. Usually the charges will also  include the costs of management, either by the landlord and, or by a professional managing agent.

Service charges will vary from year to year; they can go up or down without any limit other than that they are reasonable.

Details of what can (and cannot) be charged by the landlord and the proportion of the charge to be paid by the individual leaseholder will all be set out in the lease. The landlord arranges provision of the services.

The leaseholder pays for them. All costs must be met by the leaseholders; the landlord will generally make no financial contribution. Most modern leases allow for the landlord to collect service charges in advance, repaying any surplus or collecting any shortfall at the end of the year.


You can read the full article at www.lease-advice.org/publications – select Advice Guides from the menu.


 

Please feel free to send us an email with your suggestions for future articles to [email protected]