Croydon leasehold conveyancing: Q and A’s
I am tempted by the attractive purchase price for a couple of maisonettes in Croydon both have approximately 50 years remaining on the lease term. Should I regard a short lease as a deal breaker?
There are no two ways about it. A leasehold flat in Croydon is a wasting asset as a result of the reducing lease term. The nearer the lease gets to its expiry date, the more it adversely affects the salability 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 a residence 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 Croydon 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 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 any new 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 property in Croydon. Do I have any liability for 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. However, your landlord may still be able to take action to forfeit the lease. It is an essential part 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).
I am a negotiator for a reputable estate agent office in Croydon where we see a number of leasehold sales jeopardised as a result of short leases. I have received contradictory information from local Croydon conveyancing solicitors. Please can you shed some light as to whether the vendor of a flat can instigate the lease extension formalities for the buyer?
Provided that 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. This means that the buyer need not have 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 sale.
Alternatively, it may be possible 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.
Do you have any top tips for leasehold conveyancing in Croydon with the aim of saving time on the sale process?
- Much of the frustration in leasehold conveyancing in Croydon can be avoided where you instruct lawyers the minute you market your property and ask them to collate the leasehold information needed by the buyers solicitors.
- In the event that you altered the property did you need the Landlord’s approval? Have you, for example laid down wooden flooring? Most leases in Croydon state that internal structural changes or installing wooden flooring calls for a licence from the Landlord acquiescing to such changes. Should you dont have the paperwork to hand you should not communicate with the landlord without checking with your conveyancer in the first instance.
I inherited a second floor flat in Croydon. In the absence of agreement between myself and the freeholder, can the Leasehold valuation Tribunal determine the premium due for a lease extension?
Most certainly. We are happy to put you in touch with a Croydon conveyancing firm who can help.
An example of a Freehold Enfranchisement matter before the tribunal for a Croydon flat is 29 Woodstock Road in April 2014. the Tribunal determined that the premiums to be paid into court in respect of the purchase of the freehold registered at HMLR under Title N0.SY3997 should be £7,217. This case related to 4 flats. The the unexpired term as at the valuation date was 98 years.
What are the frequently found deficiencies that you witness in leases for Croydon properties?
Leasehold conveyancing in Croydon is not unique. All leases are unique and drafting errors can sometimes mean that certain clauses are wrong. For example, if your lease is missing any of the following, it could be defective:
- A provision to repair to or maintain parts of the building
- 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 will encounter difficulties when selling your property if you have a defective lease as they can affect a potential buyer’s ability to obtain a mortgage. Yorkshire Building Society, Skipton Building Society, and Alliance & Leicester all have very detailed conveyancing instructions when it comes to what is expected in a lease. If a mortgage lender believes that the lease does not cover certain provisions they may refuse to grant the mortgage, forcing the buyer to pull out.