Frequently asked questions relating to Chinatown leasehold conveyancing
I today plan to offer on a house that seems to be perfect, at a reasonable price which is making it more attractive. I have since been informed that the title is leasehold rather than freehold. I would have thought that there are issues buying a leasehold house in Chinatown. Conveyancing lawyers have are soon to be instructed. Will my lawyers set out the risks of buying a leasehold house in Chinatown ?
The majority of houses in Chinatown are freehold rather than leasehold. This is one of the situations where having a local solicitor used to dealing with such properties who can help the conveyancing process. it is apparent that you are purchasing in Chinatown in which case you should be shopping around for a Chinatown conveyancing practitioner and be sure that they are used to advising on leasehold houses. As a matter of priority you will need to check the unexpired lease term. As a tenant you will not be entirely free to do whatever you want with the house. The lease will likely included provisions such as requiring the freeholder’sconsent to carry out changes to the property. You may also be required to pay a contribution towards the maintenance of the estate where the house is part of an estate. Your solicitor will report to you on the legal implications.
I am looking at a two apartments in Chinatown which have about forty five years remaining on the lease term. Do I need to be concerned?
There is no doubt about it. A leasehold flat in Chinatown is a wasting asset as a result of the shortening lease. The nearer the lease gets to zero years unexpired, the more it reduces the marketability of the property. The majority of purchasers and banks, leases with under 75 years become less and less attractive. On a more positive 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 premises 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 Chinatown conveyancing experts who will explain the options available to you during an initial telephone conversation free of charge. A more straightforward and quicker method of extending would be to contact your landlord directly and sound him out on the prospect of extending the lease They may agree to a smaller lump sum and an increase in the ground rent, but to shorter extension terms in return. 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 flat in Chinatown. Am I liable to pay service charges for periods before my ownership?
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. Strange as it may seem, your landlord may still be able to take action to forfeit the lease. A critical element of leasehold conveyancing for your conveyancer to ensure 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).
Our conveyancer has advised that he intends to complete and exchange simultaneously on the disposal of our £350000 apartment in Chinatown next week. The management company has quoted £336 for Certificate of Compliance, building insurance schedule and 3 years service charge statements. Is it legal for a freeholder to charge exorbitant fees for a leasehold conveyance in Chinatown?
Chinatown conveyancing on leasehold flats often necessitates the buyer’s lawyer sending questions for the landlord to answer. Although the landlord is under no legal obligation to answer such questions the majority will be content to do so. They are entitled levy a reasonable administration fee for answering enquiries or supplying documentation. There is no set fee. The average costs for the paperwork that you are referring to is £350, in some cases it is in excess of £800. The management information fee levied by the landlord must be accompanied by a synopsis of entitlements and obligations in respect of administration charges, otherwise the charge is technically not due. In reality one has little option but to pay whatever is demanded if you want to complete the sale of your home.
I have attempted and failed to negotiate with my landlord for a lease extension without any joy. Can the Leasehold Valuation Tribunal decide on such matters? Can you recommend a Chinatown conveyancing firm to act on my behalf?
if there is a missing landlord or if there is disagreement about what the lease extension should cost, under the relevant statutes you can apply to the LVT to assess the price payable.
An example of a Freehold Enfranchisement case for a Chinatown flat is 36 New Wanstead in August 2010. The Tribunal arrived at a valuation of the premium for the freehold of £22,359. This case was in relation to 2 flats. The remaining number of years on the lease was 73.92 years.
What makes a Chinatown lease problematic?
Leasehold conveyancing in Chinatown is not unique. Most leases are individual and drafting errors can result in certain sections are not included. The following missing provisions could result in a defective lease:
- A provision to repair to or maintain parts of the premises
- A duty to insure the building
- Clauses dealing with recovering service charges for expenditure on the building or common parts.
- Maintenance charge proportions which don’t add up to the correct percentage
You could have a problem when selling your property if you have a defective lease as they can affect a potential buyer’s ability to obtain a mortgage. HSBC Bank, The Mortgage Works, and Britannia all have very detailed requirements when it comes to what is expected in a lease. Where a lender has been advised by their lawyers that the lease is problematic they may refuse to grant the mortgage, obliging the buyer to pull out.