Top Five Questions relating to Paddington leasehold conveyancing
I’m about to sell my ground floor flat in Paddington.Conveyancing has not commenced but I have just received a quarterly service charge invoice – what should I do?
Your conveyancing lawyer is likely to suggest that you should clear 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 managing agents 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 meet my requirements, at a reasonable price which is making it more attractive. I have just been informed that it's a leasehold as opposed to freehold. I would have thought that there are particular concerns purchasing a house with a leasehold title in Paddington. Conveyancing solicitors have not yet been appointed. Will my lawyers set out the implications of buying a leasehold house in Paddington ?
Most houses in Paddington are freehold and not leasehold. In this scenario it’s worth having a local conveyancer who is familiar with the area can help the conveyancing process. it is apparent that you are purchasing in Paddington so you should seriously consider looking for a Paddington conveyancing solicitor and check that they have experience in dealing with leasehold houses. First you will need to check the number of years remaining. Being a leaseholder you will not be at liberty to do whatever you want to the property. The lease comes with conditions for example requiring the freeholder’spermission to carry out alterations. You may also be required to pay a service charge towards the upkeep of the communal areas where the house is located on an estate. Your lawyer should appraise you on the various issues.
I am looking at a two flats in Paddington which have in the region of fifty years unexpired on the leases. Will this present a problem?
There are no two ways about it. A leasehold flat in Paddington is a deteriorating asset as a result of the shortening lease. The closer the lease gets to its expiry date, the more it reduces the value of the property. The majority of buyers and lenders, 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 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 Paddington 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 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.
I am a negotiator for a reputable estate agent office in Paddington where we see a number of leasehold sales put at risk as a result of short leases. I have been given conflicting advice from local Paddington conveyancing firms. Could you shed some light as to whether the seller of a flat can commence the lease extension process 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. This means that the proposed purchaser can avoid having to sit tight for 2 years to extend their lease. Both sets of lawyers will agree to form of assignment. The assignment has to be done before, or at the same time as completion of the disposal of the property.
An alternative approach is to agree the lease extension with the freeholder 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.
I have attempted and failed to negotiate with my landlord for a lease extension without any joy. Can one apply to the Leasehold Valuation Tribunal? Can you recommend a Paddington conveyancing firm to act on my behalf?
Absolutely. We can put you in touch with a Paddington conveyancing firm who can help.
An example of a Lease Extension case for a Paddington property is Flats 37 & 39 88/90 Portland Place in December 2010. The Tribunal determined that the premium payable for the lease extensions in respect of these two flats is as follows:- For Flat 37, the sum of £385,230.00 For Flat 39, the sum of £436,780.00 This case affected 2 flats. The unexpired term was 24.02 years.
What makes a Paddington lease problematic?
There is nothing unique about leasehold conveyancing in Paddington. All leases is drafted differently and legal mistakes in the legal wording can sometimes mean that certain sections are wrong. The following missing provisions could result in a defective lease:
- A provision to repair to or maintain elements of the premises
- Insurance obligations
- Clauses dealing with recovering service charges for expenditure on the building or common parts.
- Service charge per centages that don't add up correctly leaving a shortfall
You may encounter 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. Birmingham Midshires, Chelsea Building Society, and TSB all have express conveyancing instructions 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.