Harry (my fiance) and I may need to rent out our Melbourne ground floor flat temporarily due to taking a sabbatical. We used a Melbourne conveyancing firm in 2004 but they have since shut and we did not think at the time get any guidance as to whether the lease prohibits the subletting of the flat. How do we find out?

The lease governs relations between the freeholder and you the flat owner; specifically, it will say if subletting is prohibited, or permitted but only subject to certain caveats. The rule is that if the lease contains no expres ban or restriction, subletting is permitted. Most leases in Melbourne do not prevent subletting altogether – such a clause would adversely affect the market value the property. Instead, there is usually a basic requirement that the owner notifies the freeholder, possibly supplying a duplicate of the sublease.

I only have Fifty years remaining on my flat in Melbourne. I need to get lease extension but my freeholder is missing. What should I do?

On the basis that you qualify, under the Leasehold Reform, Housing and Urban Development Act 1993 you can submit an application to the County Court for for permission to dispense with the service of the initial notice. This will mean that your lease can be lengthened by the Court. You will be obliged to demonstrate that you or your lawyers have done all that could be expected to track down the freeholder. For most situations a specialist may be helpful to try and locate and prepare a report to be accepted by the court as proof that the landlord is indeed missing. It is wise to seek advice from a conveyancer both on proving the landlord’s disappearance and the application to the County Court covering Melbourne.

I am hoping to put an offer on a small detached house that seems to meet my requirements, at a great price which is making it more attractive. I have subsequently discovered that the title is leasehold as opposed to freehold. I would have thought that there are issues buying a house with a leasehold title in Melbourne. Conveyancing lawyers have are soon to be instructed. Will they explain the issues?

Most houses in Melbourne are freehold rather than leasehold. In this scenario it’s worth having a local solicitor who is familiar with the area can assist with the conveyancing process. It is clear that you are purchasing in Melbourne in which case you should be shopping around for a Melbourne conveyancing solicitor and check that they have experience in dealing with leasehold houses. As a matter of priority you will need to check the number of years remaining. As a tenant you will not be at liberty to do whatever you want to the property. The lease comes with conditions for example obtaining the freeholder’spermission to conduct changes to the property. It may be necessary to pay a contribution towards the upkeep of the communal areas where the property is part of an estate. Your conveyancer should appraise you on the various issues.

I am looking at a two flats in Melbourne both have about 50 years remaining on the lease term. Will this present a problem?

There are plenty of short leases in Melbourne. The lease is a right to use the property for a prescribed time frame. As a lease gets shorter the saleability of the lease decreases and it becomes more expensive to acquire a lease extension. This is why it is advisable to increase the term of the lease. It is often difficult to sell a property with a short lease because mortgage lenders less inclined to grant a loan on such properties. Lease extension can be a difficult process. We recommend you get professional assistance from a solicitor and surveyor with experience in this area

What are the frequently found defects that you see in leases for Melbourne properties?

There is nothing unique about leasehold conveyancing in Melbourne. Most leases are individual and legal mistakes in the legal wording can sometimes mean that certain clauses are wrong. For example, if your lease is missing any of the following, it could be defective:

• Repairing obligations to or maintain elements of the property
• 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 will have 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. National Westminster Bank, Virgin Money, and Bank of Ireland 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 does not cover certain provisions they may refuse to grant the mortgage, obliging the buyer to withdraw.

Melbourne Conveyancing for Leasehold Flats - A selection of Questions you should ask before Purchasing

What is the annual service fee and ground rent? It would be wise to find out as much as you can regarding the company managing the building as they will affect your use and enjoyment of the property. As the owner of a leasehold property you will be at the mercy of the managing agents both financially and when it comes to every day matters like the upkeep of the common parts. Ask prospective neighbours what they think of their service. In conclusion, find out the dates that you are obliged pay the service charge to the managing agents and precisely what you get for your money. In the main the cost for major works tend not to be included within service charges, albeit that there some managing agents in Melbourne obliged leaseholders to pay into a sinking fund and this is used to offset against major works.

Other Topics

Lease Extensions in Melbourne