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Recently asked questions relating to Chelmsford leasehold conveyancing

I am looking at a couple of flats in Chelmsford which have approximately forty five years left on the leases. Should I regard a short lease as a deal breaker?

There is no doubt about it. A leasehold flat in Chelmsford is a deteriorating asset as a result of the reducing lease term. The nearer the lease gets to its expiry date, the more it reduces the marketability of the premises. For most buyers and banks, leases with under eighty years become less and less marketable. On a more upbeat note, leaseholders can extend their leases by serving a Section 42 Notice. One stipulation is that they must have owned the premises for two years (unlike a Section 13 notice for purchasing the freehold, when leaseholders can participate from day one of ownership). When successful, they will have the right to an extension of 90 years to the current term and ground rent is effectively reduced to zero. Before moving forward with a purchase of property with a short lease term remaining you should talk to a solicitor specialising in lease extensions and leasehold enfranchisement. We are are happy to put you in touch with Chelmsford conveyancing experts who will explain the options available to you during an initial telephone conversation free of charge. More often than not it is possible to negotiate informally with the freeholder to extend the lease You may find he or she is happy to negotiate informally and willing to consider your offer straight off, without having to involve anyone else. This will save you time and money and it could help you reach a lower price on the lease. You need to ensure that the agreed terms represent good long-term value compared with the standard benefits of the Section 42 Notice and that onerous clauses are not inserted into any redrafting of the lease.

Last month I purchased a leasehold house in Chelmsford. Do I have any liability for service charges relating to a period prior to my ownership?

In a situation where the service charge has already been demanded from the previous owner and they have not paid you would not usually be personally liable for the arrears. However, your landlord may still be able to take action to forfeit the lease. A critical element of leasehold conveyancing for your conveyancer to be sure to have an up to date clear service charge receipt before completion of your purchase. If you have a mortgage this is likely to be a requirement of your lender.

If you purchase part way through an accounting year you may be liable for charges not yet demanded even if they relate to a period prior to your purchase. In such circumstances your conveyancer would normally arrange for the seller to set aside some money to cover their part of the period (usually called a service charge retention).

I am employed by a long established estate agency in Chelmsford where we see a few flat sales jeopardised as a result of leases having less than 80 years remaining. I have been given contradictory information from local Chelmsford conveyancing firms. Please can you clarify whether the owner of a flat can instigate the lease extension formalities for the buyer?

As long as the seller has been the owner for at least 2 years it is possible, to serve a Section 42 notice to commence the lease extension process and assign the benefit of the notice to the purchaser. The benefit of this is that the buyer can avoid having to wait 2 years to extend their lease. Both sets of lawyers will agree to form of assignment. The assignment has to be done prior to, or at the same time as completion of the disposal of the property.

An alternative approach is to extend the lease informally by agreement with the landlord either before or after the sale. If you are informally negotiating there are no rules and so you cannot insist on the landlord agreeing to grant an extension or transferring the benefit of an agreement to the purchaser.

Can you offer any advice when it comes to choosing a Chelmsford conveyancing firm to carry out our lease extension conveyancing?

When appointing a solicitor for lease extension works (regardless if they are a Chelmsford conveyancing firm) it is essential that he or she should be familiar with the legislation and specialises in this area of work. We recommend that you talk with several firms including non Chelmsford conveyancing practices before you instructing a firm. If the firm is ALEP accredited then that’s a bonus. Some following of questions might be of use:

  • If they are not ALEP accredited then why not?
  • What are the costs for lease extension conveyancing?

  • Do you have any advice for leasehold conveyancing in Chelmsford from the perspective of speeding up the sale process?

    • A significant proportion of the delay in leasehold conveyancing in Chelmsford can be bypassed if you appoint lawyers as soon as your agents start advertising the property and ask them to put together the leasehold documentation needed by the buyers conveyancers.
    • The majority landlords or managing agents in Chelmsford levy fees for providing management packs for a leasehold homes. You or your lawyers should find out the actual amount of the charges. The management information can be applied for as soon as you have a buyer, thus reducing delays. The typical amount of time it takes to obtain the necessary information is three weeks. It is the most common cause of frustration in leasehold conveyancing in Chelmsford.
  • A minority of Chelmsford leases require Licence to Assign from the landlord. If this is the case, you should place the estate agents on notice to make sure that the purchasers obtain financial (bank) and professional references. The bank reference will need to confirm that the buyers are able to meet the annual service charge and the actual amount of the service charge should be quoted in the bank’s letter. You will therefore need to provide your estate agents with the actual amount of the service charge so that they can pass this information on to the buyers or their solicitors.
  • If you have had any disputes with your landlord or managing agents it is essential that these are settled before the property is marketed. The buyers and their solicitors will be reluctant to purchase a property where there is a current dispute. You may need to swallow your pride and pay any arrears of service charge or resolve the dispute prior to completion of the sale. It is therefore preferable to have any dispute settled ahead of the contract papers being issued to the buyers’ solicitors. You will still have to reveal particulars of the dispute to the buyers, but it is clearly preferable to reveal the dispute as historic rather than unsettled.
  • You may think that you are aware of the number of years remaining on your lease but you should double-check by asking your solicitors. A purchaser's lawyer will not be happy to advise their client to where the lease term is below 75 years. It is therefore important at an early stage that you identify whether the lease requires a lease extension. If it does, contact your solicitors before you put your home on the market for sale.

  • Leasehold Conveyancing in Chelmsford - A selection of Questions you should consider before Purchasing

      Please note that where the lease has less than 80 years it will have adverse implications on the salability of the apartment. It is worth checking with your lender that they are happy with residual term of the lease. A short lease means that you will almost definitely have to extend the lease at some point and you need to have some idea of how much this would cost. Remember, in most cases you will be required to have owned the residence for a couple of years before you are entitled to exercise a lease extension. Does the lease contain onerous restrictions? The best form of lease structure is a share of the freehold. In this situation the tenants enjoy being in charge if their destiny and even though a managing agent is usually retained if the building is bigger than a house conversion, the managing agent retained by the leaseholders.

    Other Topics

    Lease Extensions in Chelmsford