Estate agents have just been given the go-ahead to market my garden apartment in Spitalfields.Conveyancing has not commenced but I have just received a half-yearly service charge demand – Do I pay up?

Your conveyancing lawyer is likely to suggest that you should clear the invoice 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. This will smooth the conveyancing process.

I am attracted to a two maisonettes in Spitalfields which 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 apartment in Spitalfields is a deteriorating asset as a result of the reducing lease term. The nearer the lease gets to zero years unexpired, the more it reduces the marketability of the property. For most buyers and lenders, leases with under 75 years become less and less marketable. 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 property 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 Spitalfields conveyancing experts who will explain the options available to you during an initial telephone conversation free of charge. More often than not it is possible to negotiate informally with the freeholder to extend 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.

Last month I purchased a leasehold flat in Spitalfields. 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. 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).

What advice can you give us when it comes to appointing a Spitalfields conveyancing practice to carry out our lease extension conveyancing?

If you are instructing a conveyancer for your lease extension (regardless if they are a Spitalfields conveyancing practice) it is most important that they be familiar with the legislation and specialises in this area of work. We advise that you talk with several firms including non Spitalfields conveyancing practices prior to instructing a firm. If the firm is ALEP accredited then that’s a bonus. Some following of questions could be useful:

• How familiar is the practice with lease extension legislation?
• If they are not ALEP accredited then what is the reason?

Do you have any top tips for leasehold conveyancing in Spitalfields from the perspective of saving time on the sale process?

• A significant proportion of the delay in leasehold conveyancing in Spitalfields can be bypassed where you appoint lawyers as soon as your agents start marketing the property and request that they start to put together the leasehold information needed by the purchasers’ lawyers.
• If you have carried out any alterations to the property would they have required Landlord’s approval? Have you, for example installed wooden flooring? Most leases in Spitalfields state that internal structural changes or laying down wooden flooring require a licence from the Landlord acquiescing to such changes. Should you dont have the consents in place you should not communicate with the landlord without checking with your lawyer in the first instance.
• Some Spitalfields leases require Licence to Assign from the landlord. If this applies to your lease, you should place the estate agents on notice to make sure that the purchasers put in hand financial (bank) and professional references. Any bank reference should make it clear that the buyer is able to meet the yearly 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 buyers or their solicitors.
• If there is a history of conflict with your landlord or managing agents it is very important that these are settled prior to the flat being put on the market. The purchasers and their solicitors will be concerned about purchasing a property where there is an ongoing dispute. You will have to accept that you will have to pay 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 are still duty bound to disclose particulars of the dispute to the purchasers, but it is better to reveal the dispute as historic rather than unsettled.
• If you have the benefit of shareholding in the Management Company, you should make sure that you hold the original share certificate. Organising a re-issued share certificate is often a time consuming formality and frustrates many a Spitalfields home move. If a duplicate share is needed, you should approach the company director and secretary or managing agents (if relevant) for this sooner rather than later.

Notwithstanding our best efforts, we have been unsuccessful in trying to purchase the freehold in Spitalfields. Can this matter be resolved via the Leasehold Valuation Tribunal?

Where there is a absentee landlord or where there is disagreement about the premium for a lease extension, under the Leasehold Reform, Housing and Urban Development Act 1993 it is possible to make an application to the LVT to judgment on the price payable.

An example of a Freehold Enfranchisement decision for a Spitalfields premises is 1-41 Royal Tower Lodge 40 Cartwright Street in April 2013. the tribunal adding the agreed value of capitalised ground rents and the reversion the price to be paid for the freehold was £1,187,000 This case affected 41 flats. The unexpired term was 107 years.

I inherited a split level flat in Spitalfields, conveyancing was carried out half a dozen years ago. Can you give me give me an indication of the likely cost of a lease extension? Equivalent flats in Spitalfields with over 90 years remaining are worth £208,000. The ground rent is £50 yearly. The lease finishes on 21st October 2092

With 66 years remaining on your lease we estimate the price of your lease extension to range between £16,200 and £18,600 plus costs.

The figure that we have given is a general guide to costs for renewing a lease, but we are not able to provide the actual costs without more comprehensive investigations. Do not use this information in tribunal or court proceedings. There may be other issues that need to be considered and clearly you should be as accurate as possible in your negotiations. Neither should you take any other action placing reliance on this information without first seeking the advice of a professional.