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Questions and Answers: Manor House leasehold conveyancing

I am looking at a two flats in Manor House which have approximately 50 years remaining on the leases. Will this present a problem?

There are plenty of short leases in Manor House. The lease is a right to use the premises for a prescribed time frame. As the lease shortens the value of the lease decreases and results in it becoming more expensive to acquire a lease extension. This is why it is generally wise to extend the lease term. It is often difficult to sell a property with a short lease because mortgage companies less inclined to grant a loan on such properties. Lease extension can be a protracted process. We recommend you get professional help from a conveyancer and surveyor with experience in this arena

I've recently bought a leasehold flat in Manor House. Am I liable to pay service charges for periods before my ownership?

In a situation where the service charge has already been demanded from the previous lessee 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).

I am employed by a long established estate agent office in Manor House where we have experienced a number of leasehold sales jeopardised as a result of leases having less than 80 years remaining. I have received inconsistent advice from local Manor House conveyancing firms. Could you confirm whether the seller of a flat can instigate the lease extension process for the purchaser on completion of the sale?

As long as the seller has been the owner for at least 2 years it is possible, to serve a Section 42 notice to start 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 sit tight for 2 years for a lease extension. Both sets of lawyers will agree to form of assignment. The assignment has to be done before, or simultaneously with completion of the disposal of the property.

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 buyer.

Can you provide any advice for leasehold conveyancing in Manor House with the aim of speeding up the sale process?

  • Much of the delay in leasehold conveyancing in Manor House can be bypassed if you appoint lawyers the minute you market your property and request that they start to collate the leasehold documentation which will be required by the purchasers’ conveyancers.
  • If you have carried out any alterations to the property would they have required Landlord’s consent? In particular have you laid down wooden flooring? Manor House leases often stipulate that internal structural changes or addition of wooden flooring require a licence from the Landlord acquiescing to such alterations. Should you dont have the paperwork in place do not contact the landlord without contacting your lawyer first.
  • Some Manor House leases require Licence to Assign from the landlord. If this is the case, it would be prudent to place the estate agents on notice to make sure that the purchasers obtain financial (bank) and professional references. Any bank reference should make it clear that the buyer is financially capable of paying 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 purchasers or their solicitors.
  • If you have had any disputes with your freeholder or managing agents it is very important that these are resolved before the property is marketed. The buyers and their solicitors will be reluctant to purchase a flat where a dispute is unsettled. You will have to accept that you will have to discharge any arrears of service charge or resolve the dispute prior to the buyers completing the purchase. 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 details of the dispute to the buyers, but it is clearly preferable to present the dispute as over as opposed to ongoing.
  • You believe that you know the number of years left on your lease but it would be wise to double-check via your conveyancers. A buyer’s conveyancer will be unlikely to recommend their client to where the lease term is below 80 years. In the circumstances it is important at an early stage that you consider whether the lease requires a lease extension. If it does, contact your solicitors before you put your property on the market for sale.

  • I have attempted and failed to negotiate with my landlord to extend my lease without getting anywhere. Can the Leasehold Valuation Tribunal adjudicate on such issues? Can you recommend a Manor House conveyancing firm to assist?

    if there is a absentee freeholder or where there is dispute about what the lease extension should cost, under the relevant statutes it is possible to make an application to the Leasehold Valuation Tribunal to make a decision on the premium.

    An example of a Freehold Enfranchisement decision for a Manor House flat is 51 Lorne Road in November 2009. The price Payable as decided by the tribunal for the freehold reversion was £27,000. The valuation follows the order of the County Court made on 3 April 2008 granting a vesting order. This case related to 1 flat. The remaining number of years on the lease was 71 years.

    What makes a Manor House lease unacceptable for security purposes?

    Leasehold conveyancing in Manor House is not unique. All leases is drafted differently and legal mistakes in the legal wording can sometimes mean that certain sections are missing. For example, if your lease is missing any of the following, it could be defective:

    • A provision to repair to or maintain elements of the premises
    • Insurance obligations
    • A provision for the recovery of money spent for the benefit of another party.
    • Service charge per centages that don't add up correctly leaving a shortfall

    A defective lease can cause issues when trying to sell a property primarily because it impacts on the ability to obtain a mortgage on the property. Yorkshire Building Society, The Mortgage Works, and Nottingham Building Society 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 provide security, obliging the purchaser to pull out.