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A flat or apartment leaseholder can also own a share of the freehold of their entire building, in addition to a lease on their individual flat. This is referred to as a share of freehold.

Because buying the freehold of a flat is not possible on an individual basis, flat or apartment leaseholders instead have the option to own a share of the building’s freehold by joining the collective group that wants to take over the freehold of the property. This process is known as collective enfranchisement. A collective enfranchisement occurs when a group of leaseholders band together to take control of the freehold of their building.

If you are looking for a lease extension in the UK, contact us for assistance. Our team of chartered surveyors can help you successfully negotiate your lease extensions or enfranchisement. Give us a call for a consultation today

A new leaseholder who buys a unit with a share of freehold becomes a shareholder in
the company that owns the freehold of the building. They control the freehold and the
management of the building. The apartments and flats in the building are still leaseholds, but as
members of the freehold company, they have a vote in how the building is
managed, can instruct contractors, can prioritize work, and manage
their service charges. Their leases are typically extended for
999 years.

What are the Responsibilities of a Freehold Shareholder?

The collective freehold shareholders, or freehold owners, are responsible for the
building and its land’s maintenance. This involves obligations such as ensuring that lifts, stairways, and halls comply with health and safety laws, instructing on repairs, and staying up to date on ever-changing property legislation. They have control over the money, what work is done, and how it is prioritized. Many buildings (or collectives) hire a managing agent to handle this for them.

What is a Managing Agent?

A managing agent's tasks include tendering contracts for work to be done, collecting service charges, coordinating payments for any work done on the building, and developing budgets for anticipated building work.

What are the Benefits of Buying a Freehold?

You may be considering forming a collective with the other leaseholders in your block. Though it may appear to be a daunting process, it is not, and there are numerous advantages to purchasing your freehold outright, including:

● Increasing the value of your home
● Complete control over the building’s maintenance.
● Taking complete control of the management
● The ability to obtain more extensive or affordable insurance policies
● Though a freehold purchase will provide some or all of these benefits, owning a part of a freehold has some drawbacks.

Key Problems with Buying a Share of Freehold

1) Shared Management – Purchasing a freehold share is not the same as purchasing a freehold dwelling. When you buy a freehold residence, you have ultimate authority over everything that happens to your property. You get to make all decisions about what gets done and what doesn't. When you just own a portion of a freehold, decisions are taken jointly with the other freehold owners.

This means that your co-owners (shareholders) may be able to make decisions that impact your property. However, if you did not own a share of the freehold, you would be in a worse position because you would have little/no say in these decisions.

This small issues with owning a freehold share, but they are not insurmountable. Whilst all freehold shareholders may not agree on everything, at least they all have a say. Because of the complexities of this and other issues, we recommend seeking professional advice before purchasing a freehold.

2) Lack of Expertise – It is critical that all freeholders have a good awareness of Landlord and Tenant rules, or have selected a representative who does, to guarantee the building maintenance and upkeep responsibilities, as well as health and safety legislation, are met. A lack of knowledge in these areas may result in building deterioration, as well as disgruntled or vulnerable individuals living in potentially hazardous surroundings. Failure to comply with legislation may also result in criminal prosecution, as well as penalties or even jail, which is why we always recommend that you obtain professional advice before purchasing a share of the freehold.

3) Cost of purchasing the freehold – It can sometimes be very expensive to purchase the freehold. This is because the freehold will include any flats which are owned by the current freeholder, porter flats (or other staff flats), storage cupboards, land, car park etc. Therefore, the cost can quite easily become prohibitive.

Buying the freehold of your property could be very beneficial. However, the process involved in purchasing your freehold is complex and confusing. Leasehold Valuations will guide you and advise you of your best options Feel free to call us at 01753 542984 for a free 10-minute consultation.

Introduction

As a landlord, it’s essential to understand the distinction between tenancy agreements and short-term rental agreements, as they serve different purposes and offer unique benefits. In this article, we’ll explore the definitions, pros, and cons of each type of contract to help you make informed decisions when renting out your property.

What is a Tenancy Agreement?

A tenancy agreement is a legally binding contract between a landlord and a tenant, granting the tenant the right to occupy a rental property for a predetermined period, usually six or twelve months. This agreement provides stability and security for both parties, outlining their responsibilities, such as rent, pet policies, and lease duration. Once signed, the terms of a tenancy agreement cannot be changed without the written consent of both parties.

Pros of a Tenancy Agreement:

Stability and Consistency:

A fixed-term lease provides stability for both the landlord and the tenant, ensuring a predictable rental income for the landlord and a secure living arrangement for the tenant.

Legal Protection:

A well-drafted tenancy agreement clearly defines the rights and responsibilities of both parties, reducing the likelihood of disputes and misunderstandings.

Cons of a Tenancy Agreement:

Missed Revenue Opportunities:

In rapidly developing areas with rising property prices, fixed rent might lead to missed income from potential market increases.

Tips for Landlords:

Offer lease renewals: To maintain a long-term relationship with reliable tenants, consider offering lease renewals with updated terms and conditions. for Lease renewal visit reliable rics chartered leasehold Surveyors expert in real estate legal terms.

What is a Short-Term Rental Agreement?

Offer lease renewals: To maintain a long-term relationship with reliable tenants, consider offering lease renewals with updated terms and conditions. for Lease renewal visit reliable rics chartered leasehold Surveyors expert in real estate legal terms.

Pros of a Short-Term Rental Agreement:

Flexibility:

Short-term agreements are suitable for tenants who require temporary housing, such as travelers, students, or those in transitional periods.

Rent Adjustments:

Landlords have the flexibility to adjust rent according to market conditions.

Cons of a Short-Term Rental Agreement:

Tenant Turnover:

Frequent tenant turnover may lead to additional expenses for advertising, screening, and cleaning.

Uncertainty:

Some tenants might be hesitant about indefinite rental terms and frequent rent increases.

Conclusion on Tenancy Agreements:

Tenancy agreements are suitable for landlords seeking stability and steady income. However, they might miss out on potential revenue in areas with rapidly rising property values.

Conclusion on Short-Term Rental Agreements:

Short-term rental agreements offer flexibility and rent adjustment opportunities. They are particularly beneficial in areas with high tenant turnover.

Quick Tip

Calculate Initial Leasehold Extention Cost with Our FREE Online LEASEHOLD EXTENSION CALCULATOR

Final Conclusion:

Before offering any rental agreement, it’s crucial to understand your tenant’s needs and preferences. Whether you choose a tenancy agreement or a short-term rental agreement, prioritize clear communication and a well-drafted contract to protect both parties’ interests.
For professional assistance in evaluating your property’s value and finding the right rental agreement, consider consulting an experienced real estate valuer. They can conduct a physical inspection of the property, analyze the local area, and provide valuable insights to ensure a successful rental experience.

Many questions may arise while purchasing a leasehold property. The questions that occur most frequently relate to the length of the lease and the service charges applied to buyers wanting to purchase leasehold property.

Our experienced chartered surveyor gives his advice on the six top leasehold issues.

What is Leasehold Ownership?

Leasehold ownership is the right to hold a residential property for a specified period. Leasehold ownership is based on lease terms but also has associated property rights. It has similar rights as a freeholder has but only for the specified length of the lease.

Residential Lease – Why is it Important

The residential lease is an agreement between the leaseholder and the landlord to establish the rights of both parties. The lease agreement defines the rules or obligations as to the use of the property, also how the landlord and leaseholder should deal with each other and any other leaseholders. In addition, it defines the landlord’s obligations relating to such issues as repairs, service charges, maintenance, and management of the property. Any leasehold agreement is crucial, and the leaseholder must understand the obligations, of both parties, that it contains.

The lease wording is usually in legal or technical vocabulary and will vary from property to property. Leaseholders who find it difficult to comprehend their lease should obtain advice from a surveyor and insist they deliver a report on its terms when required to negotiate with the buyer.

Any potential buyer must establish responsibility for key issues, including the landlord’s obligations for managing and maintaining the structure, exterior, and common areas of the property, what the leaseholder’s duties will be with regards to rent and service costs, and whether there are any unusual or onerous covenants relating to the leaseholder’s use of the property.

Things to know before Buying a Leasehold Flat

Leasehold flats may be in purpose-built blocks, converted houses, or attached to retail or commercial premises. Usually, the structural part of the building and the land will stay in the landlord’s ownership. The lease agreement will cover all the spaces and facilities within the four walls of the flat, including walls, floors, and ceiling, but will not normally include any external areas. The landlord is generally responsible for the maintenance and repair of the building. Additionally, it is the landlord’s responsibility to maintain common areas and the flat’s structure and services.

The property owner can be an individual, a local authority, or a company. It is also possible that the landlord is a resident management company. In some cases, leaseholders of a block of flats can apply to extend the term of their lease or can buy the freehold from the landlord.

Remaining Lease Length

The term remaining on the leasehold is crucial. Firstly, if the lease term drops below 80 years, the cost to extend the lease increases as an additional marriage value is added. “Marriage value” is the increase in the value of the property with a long lease as opposed to a short lease. Hence the value of the property will increase on the completion of the lease extension, meaning the cost of the lease extension increases once the lease length drops below the 80-year threshold.

For more queries related to the length of the remaining lease and how much any lease extension may cost, have a lease extension valuation undertaken by an expert lease extension valuer.

Another issue to consider is that the property’s value drops each year once or reaches less than 80 years. Therefore, you must apply for a lease extension or buy the freehold in order to maximize the value of your property.

What does the service charge cover?

Generally, a service charge is a charge for the leaseholder to cover the costs of any services that landlords provide, such as cleaning the common parts, repairing the roof, gardening, etc. For some leases, the service charge would be a fixed sum that will be payable on a regular basis. Leaseholders can ask for a breakdown of the service charges and also have the right to apply to the First-tier Tribunal for any unreasonable charges in England. During the process of buying a leasehold flat, the buyer should check the details for any existing and future service charges and should also check for any forthcoming work which might affect the service charge after the purchase.

Buying a Leasehold Flat, Is Worth It?

Historically, in the UK, flats have been sold on a leasehold basis. Some leasehold flats are now sold with a share of the freehold. Buying a leasehold flat should only be done once you are familiar with the legal rights and duties related to buying a leasehold property. You should consult a chartered surveyor and get appropriate professional advice regarding any property before you consider buying.

So, you’ve finally found a place you’re comfortable with. The neighborhood is good, no leaking pipes and no creepy noise are coming from the walls at night, and just when you thought it couldn’t get any better than this, it’s already that time of the year when the landlord wants to raise the rent, potentially threatening your idea of settling down for a bit. Now that will make you think about how to negotiate the next rent rise so you can still retain your property while spending less on rent each month.

But don’t worry. Not everything has to be sad and gloomy as long as you can still try negotiating your terms with the landlord. It’s possible to reach a mutual agreement and negotiate a win-win situation for both parties, so nobody is left unsatisfied. In reality, it works like any other negotiation – you just have to find a way that makes both you and your landlord happy.

Once you begin to consider what both parties have to win or lose, it becomes a much simpler process. Of course, you want to pay less but to avoid moving out and looking for another property. At the same time, the landlord wants more money but to avoid looking for a new tenant. With that in mind, you can present an offer that suits both of you and settle on a reasonable rent amount.

If you don’t know how much to offer for a property like yours, there are two ways you can find that out, which we will discuss further. Try these methods that can help you with your negotiation. 

When do you negotiate?

There are two ways you can approach this.

• You could speak to a local estate agent and see what similar properties in the area are letting for and also find out what their fees will be for finding a new tenant for the landlord. Divide the agent’s fees by 12 and then ask the landlord if they would reduce the current market rent by this divided amount as he will not have to pay the agent’s fees if he retains you as a tenant.
• You could look on websites like Rightmove and Zoopla and see what similar properties are letting for and offer this amount to the landlord.

At this point, they would either agree to your terms or present you with their own offer, which you can compare with your valuation of the property.

RICS Valuation

Open up a dialogue as soon as you can

It is a good idea to establish direct contact with the landlord and work out a deal that works for both of you. Start discussing your terms early on because the earlier you begin a conversation, the more time you have to convince the landlord in your favor. Get in touch with them directly and try something like, “I would love to continue staying in the apartment, but the increase in the rent is a bit outside of my budget at the moment. Can we discuss this and find something that makes us both happy?” This can open up your opportunity to discuss your terms with the landlord.

Establishing contact with the landlord before you start to look for another property will open up a discussion and will give the landlord an idea of the kind of rent that you have in mind. Depending on their response, you can judge whether they are willing to bend or not. This can help you further down the line when finalizing the deal.

So, consider your budget, what exactly you can afford, and how far you’re willing to go to turn the deal in your favor.

The surveyor will undertake a physical inspection of the house. Before the physical inspection’s they investigate the location and analyze the local area to see if anything night influences the value. After this, they may check any documents regarding the lease extensions or any shared ownership details if necessary. They may also make inquiries with local selling agents before they arrive at their valuation.

RICS (Royal Institute of Chartered Surveyors) is a global professional organization for property professionals. It sets and monitors standards that members should adopt in their professional work to ensure consistency and a global brand that is recognized around the world.   

The RICS is connected to other national surveying institutions, collaborates with other professional bodies, and, in 2013, was a founder member of a coalition to develop international property measurement standards. It also delivers cost information and professional advice on valuation and other stuff.

What is a home buyers survey?

Home Buyer Survey is a visual inspection of a residential property that is done by a surveyor that inspects the observable spaces in your property or home. The Surveyor generates a report on the property’s condition and highlights the issues and defects.

How do surveyors value a property?

Instructing a Surveyor to value your property is an integral step in buying a property. When a surveyor starts evaluating the property, they look at comparable properties and the condition of your property when ascertaining the value.

The surveyor will undertake a physical inspection of the house. Before the physical inspection’s they investigate the location and analyze the local area to see if anything might influences the value. After this, they may check any documents regarding the lease extensions or any shared ownership details if necessary. They may also make inquiries with local selling agents before they arrive at their valuation.

How long does a house survey take?

The house survey takes time depending on the level of the survey that you have chosen and depends on the dimensions of the house. For instance, if you are choosing a basic survey, it may take an hour to get completed. The medium-level survey would take 3 hours. And a complete structural survey depends on the proportions of the property that vary and might even take a whole day.

When will I get my house survey report?

The house survey report may take time as it depends on the particular survey and on report complexness. The chartered surveyor will let you know how much time it will take to get the report, but it will probably take 5 to 10 days.

The cost of home buyers survey

A home survey can save you time and money; how much does the home buyers survey cost? The charges vary between surveyors but will partly depend on the size of the property. The larger the home, the longer the surveyor will need to spend analyzing and evaluating it. Leasehold Valuations has experienced chartered RICS surveyors who can efficiently value your property. 

Having a survey done is usually worth doing as it will make you conscious of any problems with the property. Although initially, it is a capital outlay it could help you avoid any surprising cost in the future. It can also be used to negotiate the price of the property down if it highlights any issues.

New-build snagging survey

Are you buying a newly constructed home? In this case, you do not need a home survey. You will need a snagging survey. What does a snagging survey mean? It includes inspecting various elements of the build such as standard finishes such as plaster, tiling, or windows, and more. By having a snagging report, you can share that with the builder so that any issues in the property can be resolved whilst the builder is still on site.

Leasehold Valuation specializes in leasehold valuations, lease extensions, enfranchisement. Have a quick 10-minute free consultation with one of our RICS experts.

Is it worth buying the freehold?

It is worth buying a freehold of your house if you have a lease on it. When you purchase a property on freehold grounds, you get the ownership of the house, and the land, it is on. 

When you buy a property as a leasehold property you https://www.leaseholdvaluations.com/buy-freehold-property/ only have the ownership of the property for a certain period which is stated in your lease. Once the lease expires, then the house will revert to the freeholder. In addition, leaseholders also need to pay other extra charges such as ground rent or maintenance charges on the property. Furthermore, there will be terms specified in the lease about what you are allowed to do with the property or not, For example, having a pet, starting a business from home. 

In England, there are currently more leasehold flats than houses. However, the North West has the highest number of leasehold residences, despite various leaseholder issues. For such reasons, the Government in 2019 stated that no new houses will be put on sale as a leasehold property.

The majority flats are sold on a leasehold basis although some do come with a share of the freehold.

The benefit of buying a freehold of a leasehold house

One of the benefits of purchasing the leasehold property is that you will only be liable for any maintenance you undertake as opposed to simply paying the landlord an annual fee and him doing very little for it.  Another benefit is that you no longer have to pay ground rent and also you can undertake whatever alterations you want to the property without seeking anybody’s consent. This can add significantly to the value of your house and you can arrange the house to suit your needs thereby making life a bit more comfortable.

The Leasehold Reform, Housing, and Urban Development Act 1993 allows leaseholders to purchase the freehold of their leasehold property after two years of leasehold ownership. Buying the freehold of a house is worth it or extending the lease can be a more suitable alternative if you do not have the funds to purchase the freehold? 

Owning a house or flat is a significant investment.

The state of leasehold ownership in the UK is improving but not yet complete. Hence, buying freehold of your property would be very beneficial. However, the process involved in purchasing your freehold is complex and confusing. Leasehold Valuations will guide you and advise you of your best options Feel free to call us at 01753 542984 for a free 10-minute consultation.

How to deal with Planning Application Refusal

If you’re planning to build a project but worried about planning application refusal? Have a glimpse at our alternatives.

Concerned regarding how to apply for planning permission for alteration or lease extension? It is a difficult task. One from four homeowners states that the planning permission matters are lurching stone to proceeding with alteration plans. Hence, it is disappointing to get the application refused. Though, you can proceed further with numerous options.

Make modifications during the application.

The permission for the planning application usually takes eight weeks except if they are especially extensive or compact, then it extends to 13 weeks. During that period, each of the planning applications offered to the local authority needs to endure a session of public consultation that differs in the interval between 3-8 weeks. If someone is affected by the application, he or she will consult you during that period.

Throughout this time, questions and disapprovals will be suggested to your plans. Certain questions and objections do not conclude the consequence of the planning application. Some objections may be neglected or assumed unnecessary. While this is the period where you can assess the response to your application.

Stay in contact with the planning director. If any disapproval arrives, that may affect the outcome, then you must be ready to make changes to the plan. This is the only period where you can make changes to your project if they are miniature and do not need any planning director consultation.

The plan may have been claimed with a condition about the problem that you addressed. If these results are these, then you need to give the administrator the time frame when you made the changes. Instead, the local planning administration may approve the application subject to conditions. While if it seems that your application will be refused and there is no alternative to rescue it, then you have the following two options:

You can either take it back and resubmit the updated application, or you can proceed with the refusal and then retry.

Take back and resubmit.

The most suitable alternative is taking back your application and resubmitting it. If your application is refused by planning prospects, then you must know how to fix it.

If you are sure about the refusal, then directly withdraw the application before it gets rejected. Execute the modifications needed in the plan and then resubmit it. It can be a difficult task, there should be no charges for resubmission (residential applications pay £172 while applying initially), granted you resubmit it in 12 months, the overall result of the plan is identical. However, remark, wherever you submit a legitimate application and withdraw it, then charges will be non-refundable. Get expert advice that can get you higher possibilities of the approval of your plans.

Request an appeal.

If your application is rejected and you think that the decision is unlawful, then you have the right to request an appeal. You can inquire about your appeal in three months. (This limit is – owners for residential owners with significant plans have up to 6 months)

When your application is rejected or refused, then, the council will direct you to request an appeal. The appeal can be requested in three ways: in writing, an informal meeting, or by a public hearing. Most of the councils will suggest appealing through the written plan. In the informal meeting, you need to give more information while a public hearing will exist in rare cases.

The request appeal can be answered by the council in six weeks of submission; after that, you must comment or discuss it in 3 weeks.

Those who are affected by your plans will have the right to comment on the applications, such as your next-door neighbor. The planning reviewer will visit your house, and he will answer the requested appeal in 2-6 weeks of the visit. It can take about 5 months from appeal to the decision (it would take more time in the public hearing), and it would be considered if you settled your plan with the planning rules and you refuse to follow the plan to approach any objections.

Normally, only one appeal from three gets a favorable outcome as claimed by the Planning Inspectorate’s records. If you can make modifications to get the application progress, and your plan would not be put at risk. This point should be more clear.

Furthermore, if you go ahead with the appeal after another rejection and still your application is rejected, then take the comments from the planning inspector on board. Hence, this can assist you in making a new plan application that would not hopefully get rejected.

If you’re looking to buy a house or residential property in England, you must know what stamp duty is and how it works.

What is Stamp Duty?

Stamp duty is a tax you have to pay when buying a residential estate or land in England or Northern Ireland for a determined value. The same thing applies if you are buying a second home and if you own a shared property. 

The stamp duty applies to both freeholders and leaseholders of the property. While if you are purchasing a house or property in Scotland, you have to pay Land and Buildings Transaction Tax (LBTT) and Wales Land Transaction Tax (LTT) rather than Stamp Duty. If you are buying additional properties, you will have to pay an additional 3% in the Stamp Duty, on top of the updated charges for each band.

How much is Stamp Duty?

Stamp duty has various price bands. For example, if you are a first-time buyer, the stamp duty cost differs from that of a second-time buyer.

How much is the stamp duty for a first-time buyer?

It can be perplexing to know how much stamp duty a first-time buyer has to pay as it has changed a few times over the past few years 

In England and Northern Ireland

There is no stamp duty payable by first-time buyers on the first £300,000 of a residential property. It has also been reduced to 5% for properties between £300,000 -£500,000.

When do you pay stamp duty?

You have to pay stamp duty within 14 days of completion, if you don’t pay the stamp duty tax in 14 days you might get charged a fine or interest. 

How much is Stamp Duty?

•       Zero for properties upto £125,000
•       2% for the portion of the property price between £125,001 – £250,000
•       5%  for the portion of the property price between £250,001 – £925,000
•       10% for the portion of the property price between £925,001 – £1.5Million
•       12% for any portion above £1.5 Million

How much is stamp duty for second homes?

In England, from April 2016, an additional stamp duty came into existence for additional properties (ie if you already own a property and are purchasing another). If you’re purchasing a second home or other property, then you’ll have to pay an extra 3% in the stamp duty charges. These additional charges are applied to the properties purchased for £40,000 or more. 

How to avoid stamp duty on a second home?

You do not have to pay stamp duty tax charges on a second home while:

• The estate’s cost is less than £40,000
• if you are left the property in a will
• you buy a new or assigned lease of 7 years or more, as long as the premium is less than £40,000 and the annual rent is less than £1,000
• property is transferred because of divorce or dissolution of a civil partnership

I’m getting divorced and buying a home. Do I have to pay the second home rate?

There are specific rules and regulations for this.  

If one of the partners leaves the marital house and a ‘property adjustment order’ exists in the situation to deliver the home over to Partner B, then the additional stamp duty charge does not apply.

If you haven’t arranged a ‘property adjustment order’ – your separation lawyer will help you with this – then you may have to pay the extra stamp duty charges. Although, you can ask for a reimbursement if you sell your share in the marital house in three years of when you walked out.  

For further questions related to Lease extensions and property, contact one of our experienced chartered surveyors at Leasehold Valuations.