Conveyancing Explained

July 22, 2008

All properties have different tenures. Most are either freehold or leasehold. As a general rule, most houses are freehold and most flats are leasehold, but this is not always the case! If you want to check which tenure your property is, get a copy of the register held at HM Land Registry (see my separate article – How do I get a copy of my deeds?).

The first paragraph under Section A Property Register will say whether the property is freehold or leasehold. If you don’t want to do it this way and you don’t know which it is, your conveyancing solicitor can tell you as soon as they get a copy of the register themselves.

Freehold title generally just means that you own the property outright and everything in it. Leasehold title however means that the freeholder (or landlord) has the primary interest in the property and your interest is secondary to his. A Lease will be in place, which grants certain rights and restrictions on both you and the landlord. Usually, Leasehold title is put in place where there is a block of flats that have common or shared areas that need to be maintained and each flat owner is usually required to pay a contribution to the landlord for the upkeep.

Because Leasehold title is more complicated to deal with in terms of the law, most conveyancing solicitors will charge a higher fee in dealing with it. Only fair really, when you take into account the extra work that they have to do for both you and the mortgage lender, checking that the correct rights and restrictions are in place, how recently the maintenance has been carried out, who is responsible for what, how much you will have to pay for a service charge or ground rent etc. As I say, its a lot more work, and often more complicated.

Unfortunately, every lease is different, although its usual for leases to be granted in similar terms in the same block of flats. This means that it has to be read thoroughly by both you and the conveyancing solicitor. If there is anything that you don’t understand, then you really must make sure that your conveyancing solicitor explains it to you. Very often, you are required to;-

1) Pay a contribution towards the upkeep of the common areas (known as a service charge)
2) Pay an annual fee to the landlord (known as ground rent)
3) Abide by the restrictions in the Lease, usually sensible requirements such as not disturbing your neighbours, not altering or extending the property without the landlord’s permission, keeping the property in a good state of decoration and repair etc.

A managing agent could deal with the property on behalf of the landlord and if this is the case, then it is the agent that you will liaise with rather than the landlord direct. In this circumstance, it is the agent to whom you would make payments of annual ground rent or service charges to.

Bear in mind that the lease might contain clauses that allow the landlord to increase the ground rent by a certain percentage after a certain number of years. Your conveyancing solicitor should check this and tell you if this is the case. The smallest amount of ground rent that you can be required to pay is a peppercorn, because in law, ground rent cannot be nil and a peppercorn is a way of ensuring that it is nil. Obviously, it’s very unlikely that you will be expected to make a payment of a peppercorn to the landlord!

Leases can also be granted for different periods of time, sometimes 99 years, or 999 years. Its important to be aware that if the lease is already in place and you are getting a mortgage, then the lender will require between 20-35 years usually to be left to run on the lease. Even if you’re not getting a mortgage, this can become important when you come to sell the property because your future buyer in 20 years time may be getting a mortgage and the requirement will probably be the same. Therefore, if there is a shorter period of time left on the lease and you don’t intend to move for a number of years, you could be limiting your potential market to those willing and able to accept a small remaining number of years on the lease.

If you want to find out more advice on leases, in addition to your conveyancing solicitor, you can contact;-

The Leasehold Advisory Service (LEASE)
31 Worship Street
London
EC2A 2DX
Tel: 020 7374 5380 Or 0845 345 1993 (9.30am to 3.30pm Monday to Friday)
Fax: 020 7374 5373
E-mail: info@lease-advice.org.uk
Website: www.lease-advice.org.uk

Hope this clarifies a few points for you, if anyone wants further information on this point, please do let me know!