Questions and Answers: Croydon leasehold conveyancing
I have just started marketing my 2 bed apartment in Croydon.Conveyancing lawyers have not yet been instructed but I have just received a half-yearly service charge invoice – should I leave it to the buyer to sort out?
It best that you pay the service charge as normal because all ground rent and service charges will be apportioned on completion, so you will be reimbursed by the buyer for the period running from after the completion date to the next payment date. Most management companies will not acknowledge the buyer until the service charges have been paid and are up to date so it is important for both buyer and seller for the seller to show that they are up to date. Having a clear account will assist your cause and will leave you no worse off financially.
I today plan to offer on a house that appears to be perfect, at a great price which is making it more attractive. I have just discovered that it's a leasehold as opposed to freehold. I would have thought that there are issues purchasing a house with a leasehold title in Croydon. Conveyancing advisers have not yet been instructed. Will my lawyers set out the risks of buying a leasehold house in Croydon ?
Most houses in Croydon are freehold and not leasehold. In this scenario it’s worth having a local solicitor who is familiar with the area can help the conveyancing process. it is apparent that you are buying in Croydon in which case you should be shopping around for a Croydon conveyancing solicitor and check that they have experience in dealing with leasehold houses. First you will need to check the unexpired lease term. Being a tenant you will not be entirely free to do whatever you want with the house. The lease will likely included provisions for example obtaining the freeholder’sconsent to carry out changes to the property. You may also be required to pay a service charge towards the upkeep of the estate where the property is part of an estate. Your conveyancer will report to you on the legal implications.
I am looking at a couple of flats in Croydon both have about 50 years left on the lease term. Will this present a problem?
There are no two ways about it. A leasehold flat in Croydon is a wasting asset as a result of the shortening lease. The nearer the lease gets to its expiry date, the more it adversely affects the value of the premises. The majority of buyers and mortgage companies, leases with under eighty 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 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 property in Croydon. Do I have any liability for service charges for periods before 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. 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 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).
We have reached the end of our tether in trying to purchase the freehold in Croydon. Can the Leasehold Valuation Tribunal adjudicate on premiums?
You certainly can. 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 property 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 affected 4 flats. The the number of years remaining on the existing lease(s) was 98 years.
What makes a Croydon lease defective?
There is nothing unique about leasehold conveyancing in Croydon. All leases is drafted differently and legal mistakes in the legal wording can sometimes mean that certain sections are erroneous. The following missing provisions could result in a defective lease:
- Repairing obligations to or maintain elements of the building
- Insurance obligations
- 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
A defective lease can cause problems when trying to sell a property primarily because it impacts on the ability to obtain a mortgage on the property. Lloyds TSB Bank, Norwich and Peterborough Building Society, and Clydesdale all have express 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.