It usually takes longer to buy a flat than a house as most flats are leasehold properties and most houses are freehold properties. As a result, there is more legal work to do on the purchase of a leasehold property than on a freehold one. More legal work means a longer time line to completion.
A leasehold property is one where the land that the property is built on is owned by someone else. If you buy a flat that is leasehold, you’ll be known as the leaseholder.
When you buy the property you’ll be told how long there is left on the lease and be informed of any conditions of the lease. There could be a ground rent to pay to the landlord and you might have to get permission from your landlord to make any changes to your property or be responsible for repairs and disputes.
You should be informed before you buy the property about any service charges payable to the landlord.
Service charges may include items such as planned work to the building, maintenance of shared areas, cleaning and decorating the shared areas and utilities costs in these areas.
Your landlord will pay for your building insurance, if you own a leasehold flat, but you will need to arrange your own contents insurance before you move in. Whilst your landlord will pay for the building insurance, this will come out of the service charge you pay to them. If you are buying a leasehold house, your landlord will not usually pay for your buildings insurance however, this will be checked when your Solicitor reviews the lease.
Potential Delays in a Leasehold Property Transaction
Your Solicitor or Conveyancer will request a Leasehold Management Pack. This will include:
- Historical management accounts
- Ground rent and service charge accounts and receipts of payments made
- General information about the property
The Managing Agents or leaseholder will charge a fee for the Leasehold Management Pack. The vendor will pay for this as an upfront cost to their Solicitor or Conveyancer. The fee can vary significantly, from as little as £300 to as much as £800.
Delays can happen when payments are not made quickly to the vendors Solicitor and then from the Solicitor to the Managing Agents or Leaseholder. Once payment is made, the Leasehold Management Pack will take time to put together and the Managing Agents or leaseholder can leave you with a delay in your purchase whilst your Solicitor or Conveyancer wait for this information. Preparation of the pack can take anywhere from three weeks to eight weeks.
Once the Leasehold Management Pack is put together and sent to your Conveyancer, they will review the pack and could potentially need further information or have additional questions and enquires to raise. This will continue to cause delays until the answers are given or information provided. Whilst this may seem slow and laborious, it is crucial to your purchase so bear with your Conveyancer or Solicitor as they are making sure that every base is covered.
Once your Conveyancer is happy with the leasehold information, they’ll provide you with a report on their findings.
The Conveyancers Association have recognised there is room for improvement in the leasehold purchase process. They have been campaigning to speed up the purchase process on leasehold properties since 2014 as these make up one in five purchases in the UK every year. You can find out more about their Leasehold Campaign here.
Lease Length Delays
You should be aware that the length of the lease left on your property can affect its value and therefore affect whether a mortgage lender will lend on it. So if you are buying a leasehold property, with a short lease left on the property you can check on the Council of Mortgage Lenders website to find out what each mortgage lenders policy is.
Think carefully, research the issues and speak to your Conveyancer or Solicitor before you go ahead with the purchase. You may find that it becomes more of a problem once you are the owner.
If you don’t want to go ahead with such a short lease, you could negotiate with the vendor. This could be negotiations about the purchase price to take into account the amount it will cost you to renegotiate the lease and the legal fees included in this process or ask that they complete the negotiations and pay the costs as a condition of your purchase.
Buying a leasehold property does take longer, but at Co-op Legal Services we’ll do all we can to speed up the process for you and make your purchase as smooth as possible.