Government to consult on new build market selling properties as leasehold

Government to consult on new build market selling properties as leasehold

Following the BBCs announcement that the Government were consulting on the new build market selling properties as leasehold and not freehold we can confirm that we would always advise our clients of their obligations under a leasehold property.

Normally leases relate to flats as there are ‘common’ areas which are maintained jointly.  This is normally done by a managing agent or management company and each flat owner pays a service charge to cover the costs.

However, some house builders are selling their properties under 99 or 125 year leases.  There may be good reason for this eg. if the properties are on a large development where there are communal landscaped areas or services provided on the estate for the residents.  Leases provide a straightforward way of providing for each resident to pay their share of the service charge.

One comment on the news was that there is no control over what the Landlord can charge for the ‘ground rent’.  The Leases we see normally have a fixed mechanism for increasing the rent – either in line with the Retail Price Index (RPI) or by a fixed increase eg. doubling every 25 years.  It is rare to see a Lease without such provisions and indeed a Lender would not approve such a lease as the rent has to be reasonable.

There are additional costs involved with leases as the commentator quite correctly stated.  This is because where there is a leasehold property, you do not OWN the land the building is constructed on – hence the payment of a ‘ground rent’.  Therefore, if you wish to extend or alter the building, you need to obtain Landlord’s consent and there is a fee for them to provide such consent. 

Additionally, when you sell a leasehold property there are various questions which need to be answered by the Landlord and/or Management Company concerning breaches of covenant, the rent and service charge.  There is a fee charged for answers to these questions to be given or a ‘pack’ to be produced.

 If you do have any queries or concerns relating to your lease, then please contact Joanne Herbert, Head of Property as she would be happy to have a look at your leasehold documentation for you.

Contact Joanne Herbert by email joanne.herbert@alsterskelley.com or telephone 01926 356016.

 


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