fbpx

Beware the leasehold property trap

Over the last several years, there has been an increase in demand for affordable housing in the United Kingdom. As a result, some builders are building residences for purchasers on a reduced budget.

This is clearly excellent news, but it may come at a cost.

Keep an Eye on Things:

It's nothing new to sell a house as a leasehold, and it's not always a negative thing. It all depends on the leasing conditions.

Some property businesses, on the other hand, have sold leaseholds to other property companies. These businesses, according to The Guardian, have offered to sell the homeowners the freehold rights to their house for a premium sum. If the owner refuses, they can keep paying the ground rent, which increases every 10 years.

The lease on a new-build leasehold property is typically 999 years long, with a ground rent of roughly £295 each year.

Our lease extension experts can guide you through with efficiency.

Make sure you Receive Legal Guidance before Extending your Lease:

When a leaseholder is uninformed of their statutory entitlement to an extended lease, they may be forced to accept a terrible bargain from their landlord. The Landlord might give a lease period that is shorter than the statutory term, require the leaseholder to pay a higher ground rent that is often changed, or simply demand a payment that is substantially greater than what is could be if the leaseholder had proper professional advice.

In Fact:

As a result, some homeowners might find themselves between a rock and a hard place. They may either pay the escalating ground rent payments or a higher price for the freehold.
When one buyer acquired a leasehold house, they were informed they could buy the freehold for £2000 to £3000, according to Guardian Money. However, they were informed a few years later that the leasehold had been transferred to a new property business, which then requested £40,000 to purchase the freehold.

In conclusion:

When purchasing a home, read the fine print on all of your contracts with the seller. If you're buying a leasehold property, make sure you understand the contract's provisions and question your lawyer about the lease's long-term cost, the option of purchasing the freehold (and how much it would cost), and if your leasehold might be transferred to a third party.

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

5 Mistakes every Enfranchisement should Avoid

According to official UK Government figures, there are over 4 million residential leasehold properties in the UK.

Almost all of them are eligible for the legal right to acquire their Freehold under Collective Enfranchisement rules. Many apartment owners are becoming aware of the various benefits of owning their freehold rather than a lease. So, why do so many Collective Enfranchisement initiatives fail to get off the ground or collapse when they do?

Our lease extension experts can guide you through with efficiency.

Here are the top five mistakes we notice the most and how to avoid them.

Mistake #1: Failing to recognize the advantages of owning a freehold.

  • “We already have long leases in place.”
  • “We have managerial authority.”
  • “Our flats will be worthless if we control the freehold.”

In various respects, freehold ownership differs from leasehold ownership, and each transaction is unique. Apart from acquiring a 999 (perpetual) lease and eliminating ever-increasing ground rent expenses, being master of your destiny has other direct and indirect advantages. When you are not restricted by a freeholder, you may manage small and significant improvements on your timetable, improve the building as you see fit, and save money on everything from contractors to insurance. The time you save by not engaging with and occasionally arguing with a Freeholder will be better spent on your own life. Leaseholders who own a portion of the freehold benefit from increased resale and rental prices. In a nutshell, leaseholders who have grouped together get along nicely. It’s what many people refer to as a “no-brainer.”

Mistake #2: Overestimation of the obstacles

  • “We will never be able to recruit the needed 50%.”
  • “It will be too expensive and take too long.”

All collective enfranchisement demands, large and small, face comparable early hurdles, but erroneous assumptions are by far the most serious. Instead of presuming that the 50% qualifying tenant criteria will not be met, recognize that they will be appreciative of the chance and actively recruit leaseholders with the objective of achieving as near to 100% as feasible. Rather than presuming that the expense would be too high or that it will take too long, go through a process of calculating both before determining whether or not to proceed at each level. Take the proper moves at the appropriate moment, and you’ll avoid problems you weren’t even aware of.

Mistake #3: Underestimating the expense or the amount of organization necessary

  • “It’s similar to extending my lease; there’s not much to do.”
  • “Our lawyer will organize everything.”
  • “We have a cost estimate from our counsel, and we will stick to our budget.”

Oversimplification of the procedure is another important reason why many collective enfranchisement requests stall or fail. There are some parallels between extending your lease and acquiring a portion of freehold. Both are legal rights with legislative procedures. The parallels, however, end there since Collective Enfranchisement has other elements to examine. You are only as powerful as the weakest connection when dealing with several signatories. You are acquiring a full facility, including land and airspace, as well as potential development sites. There are several costs you should be aware of right away (such as the Freeholder’s fair professional fees, SDLT, and company creation, maintenance, and accounting) that no one informs you about. Solicitors will oversee the legal procedure but not the project. Organizing your group correctly will result in great success; neglecting to manage the project from the start will raise expenses and hazards.

Mistake #4: Avoiding a Participation Agreement

  • “A Participation Agreement is great to have, but we can save time and money without one.”

A Participation Agreement is a legal instrument that establishes the framework for leaseholders to collaborate in order to achieve specific aims. Good quality PAs need skilled writing and signature by each individual or firm who is a leaseholder for each apartment. As a result, it is true that omitting this step can save some money and time. However, if and when any of your participants disagree, the expense of addressing and resolving the issues will usually far surpass the cost of the Participation Agreement. Preparing for arguments is the greatest way to avoid them. A Participation Agreement is a very useful instrument.

Mistake #5: Using the cheapest solicitor or surveyor

  • “Expensive solicitors and surveyors will just demand a high hourly rate.”

When it comes to training experts, obtaining the perfect match for your facility is critical. A freehold purchase is a substantial investment, and with higher benefits come more dangers. On a per-hour basis, hiring a highly specialized and skilled solicitor and surveyor may be more expensive. However, if their knowledge and skill prevent even small hiccups, they will have shown their worth many times over. Going a little cheaper might frequently turn out to be far too pricey in the long run. Find the best fit.

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

The Guide to Issuing a Section 20 Notice

When landlords or freehold owners desire to carry out qualifying works on their freehold property, legislation must be adhered to ensure that the work is done legally and with the proper notification to the leaseholders.

The piece of legislation is known as a Section 20 notice, but it might be difficult to know where to begin for individuals who have never issued legislation or collected financial payments from leaseholders before.

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

What is a Section 20 Notice?

A Section 20 Notice is a document that must be issued to all leaseholders within a building when qualifying works are performed on a residential freehold property. Works may involve things like block structure maintenance or other major works, such as roofing repairs.

However, for Section 20 Notices to be served on a leaseholder, they must contribute more than £250. As a result, this type of maintenance or repair work is designated as “major works” and must follow the Section 20 Consultation procedure.

The Landlord and Tenant Act of 1985 (as amended by the Commonhold and Leasehold Reform Act of 2002) requires a formal Section 20 Consultation. The procedure is divided into three stages, each with its own unique Section 20 Notice to leaseholders:

  • The pre-tender stage is where contractors are invited to bid on the project (i.e to give an estimated cost)
  • The Tender stage is when the landlord, RTM (Right to Manage) group, or Freehold Company receives the tenders (or estimates).
  • The contract for the works is awarded to the successful tenderer at the award of contract stage.

The Section 20 Consultation procedure’s goal is to provide leaseholders the ability to choose how their funds are used. To some extent, it does – if the landlord chooses a quote that is not the cheapest, they must justify their decision. However, for financial advantage, the procedure might be biased in favour of the landlord.

What should a Section 20 Notice contain?

A Section 20 notice must be served on each leaseholder as well as the RTA (Registered Tenants Association) if one exists at the freehold building. Because there are three distinct stages, Section 20 notices must alter to reflect the evolution of the procedure at each level.

The Section 20 Notice should include the following information during the pre-tender stage:

  • A general description of the intended works to be performed or identify an acceptable time and location where the works can be examined.
  • Justifications for why the work must be completed
  • A statement that emphasizes the overall amount of expected expenditure that the works are likely to entail.
  • A request for leaseholders to submit written comments on either the proposed works or the estimated expenditure.
  • Information describing where written leaseholder observations can be sent and when they must be filed.
  • Give a specific date when the consultation period for the proposed works will expire (this should be around 30 days after issuing the Notice)
  • Copies of the papers mentioned in the notice

During the tender stage, the Section 20 notice must include all of the foregoing, as well as the following:

  • The chosen contractor’s name and address
  • An explanation (if applicable) of the contractor’s relationship with the freeholder
  • A final anticipated cost, as well as any other relevant cost information, should be included if possible.
  • Details of any mechanisms (if any) for changing the terms of the agreement
  • An explanation of how long the agreement will last. A summary of any comments received about the initial notice of intent and the response to those comments

In the final stage, a proposal notice is sent, which must include:

  • Copies of at least two proposals, or a time and location where the proposals can be viewed
  • Invitations to submit written opinions on the proposals
  • A provided address to which written comments should be sent
  • A definite date for the end of the consultation session, as well as a reminder that responses must be received before this 30-day deadline.

Does Section 20 apply to shares of freehold owners?

Section 20 makes no distinction between landlords, freeholders, Right to Manage Companies, Resident’s Management Companies, or any other management firm with freehold duty. According to the law, all of the aforementioned are referred to as “landlords.”
If you own the freehold of a property and wish to work on, maintain, or improve it, you must follow Section 20 legislation. This implies that if you request more than £250 in funding for the works from any of your leaseholders, or if the works are expected to cost more than £100 per year, you must also follow strict Section 20 requirements.
You will be limited to a total of £250 for one-time projects or £100 per year for long-term maintenance if you do not follow Section 20 procedure in its entirety, including its time frame. This is true even if the leaseholders requested the work.
A professional managing agent will be able to manage a Section 20 process for you.

What is the Section 20 procedure for landlords?

1. Issue a Notice of Intention to Carry Out Works – The first step in starting Section 20 proceedings is to submit a Notice of Intention to Carry Out Works, which details your proposed works or maintenance contracts and why they are required. Whether or not the leaseholders propose the work, this notice must be provided.

Leaseholders have 30 days after receiving the Notice of Intention to Carry Out Works to provide comments or recommendations. Leaseholders may also nominate contractors for the job, which must all be taken into account throughout the tender process.

You can only decline to consider a leaseholder's choice for a contractor if the contractor is unqualified or unsuitable for the job, such as if they lack liability insurance.

2. Provide a Statement of Estimates – If a contract for the work has been agreed upon, you must present leaseholders with a Statement of Estimates, which is an estimate of the cost and duration of the planned works.

Estimates are gathered through a tender process that includes at least two contractors: one chosen by you (the landlord) and another chosen by one or more leaseholders.

Your leaseholders have 30 days after the tendering process to respond to the estimates and a legal right to see any bids offered by preferred contractors that you did not include in your Statement of Estimates.

3. Start the work by issuing a Notice of Reasons – Step three can go one of two ways, depending on who you choose to complete the work. You may accept and proceed with the project if you choose the contractor who submitted the lowest quote or one recommended by your leaseholders. At this time, the Section 20 procedure will be finished, allowing you to receive the money from your leaseholders.

However, if you did not choose the contractor with the lowest bid or one chosen by the lessees, you must provide leaseholders with a Notice of Reasons explaining your choice within 21 days of signing the contract.

If the leaseholders do not object to your reasoning, the Section 20 procedure will be completed. If the leaseholders object, they can submit an objection with the First-tier Tribunal, where they can dispute their duty for payment as well as the reasonableness of the service costs.

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

What To Do When your Landlord decides to Sell the Freehold

You recently got a letter in the mail from your landlord stating that he is serving a Section 5 Notice and plans to sell the freehold of your building, making you an offer. You know deep down that you should investigate your choices, but where do you begin, and what exactly is section 5?

Don’t worry: we’ve got the answers and next steps you need.

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

What is a section 5 notice?

A Section 5 Notice is issued to eligible tenants (also known as building or property leaseholders) informing them that the landlord intends to sell the property’s freehold.

The Landlord and Tenant Act of 1987 imposes a legal requirement known as the Right of First Refusal, which requires landlords to deliver the notice to leaseholders before selling the freehold interest on the market. Failure to comply is a criminal offense.

Section 5 notices (5a, 5b, 5c, 5d) are used in a variety of situations, including when the freeholder wants to sell the freehold at an auction. However, the procedure is similar for both.

Leaseholders presented with a section 5 notice must first determine how long they have to accept, but leaseholders should be allowed at least two months to make a decision. If they are satisfied with both the price and the terms of the acquisition, they must go via a formal procedure, beginning with serving an acceptance notice on the freeholder, which must be provided by a majority of the eligible tenants.

What does a right of first refusal mean for tenants?

The first step is to recognize that this is a once-in-a-lifetime opportunity.

The Freeholder is selling their estate either to an unknown buyer, such as a developer or at an auction.

According to UK law, as a leaseholder, you have the right of first refusal and can purchase your freehold if you so desire.

Challenges

It is not easy to exercise your right. You must do the following:

  • Determine who will lead the process.
  • Collaborate with at least 50% of the apartment owners in your building.
  • Determine the financial viability of purchasing the freehold at the offered price.
  • Determine the finance arrangement.
  • Nominate or form a purchaser (typically a limited company) before accepting the offer in the proper legal form.

And you only have two months or fewer to complete all of this.

You must then collect the funds and complete the transaction.

Does that seem intimidating? Don’t give up!

Unlike a Collective Enfranchisement claim, you do not need to bargain over the price with this take-it-or-leave-it offer.

It is critical to be well-organized and cohesive.

Specific aspects of the procedure can be assisted by experts.

  • Engage a trained surveyor to evaluate the freehold’s market worth. If the offer price is less than market value, you can focus your efforts on convincing leaseholders to accept it.
  • There are numerous excellent solicitors available to handle the necessary legal and conveyancing procedures. Look for someone with suitable experience.

Alternatively, you can hire an expert to mentor you and manage the entire process from start to finish, generally at a reduced cost.

Profit from the advantages that come with owning a freehold, such as:. Modernize your leases, optimize building management, and prioritize those works, repairs, and improvements. All of this will add genuine value to your flats and free up your time to focus on what matters most – your life.

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

Three Hidden Problems With Share Of Freehold

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.

What is the Difference Between Tenancy Agreement and Short term Rental Agreement?

Whether you manage properties or only rent out one home as a secondary source of income, you’re expected to know it all as a landlord. Whatever the situation, there is frequently one area where people are unclear: what distinguishes a lease from a rental agreement?

Tenancy agreements and short term rental agreements are frequently used interchangeably to refer to the same item. But the phrase may be used to describe two different kinds of contracts. Tenancy agreements and short term rental agreements are both enforceable legal transactions. But each has a very distinct function. The fundamental distinctions between the two are covered here.

What is a Tenancy Agreement?

Many landlords demand that their tenants sign lease agreements prior to moving into a rental home. A tenancy agreement is an agreement between a tenant and landlord that grants the renter the right to occupy a rented property for a predetermined time, usually six or twelve months. The agreement is a binding agreement between the landlord and the renter.

Residential leases, generally, are agreements between a landlord and a tenant that specify in detail the obligations of both parties, including rent, pet policies, and the length of the lease. Both parties’ best interests may be secured by a solid, carefully thought-out, and well-drafted lease contract since neither can change the terms of the agreement without the other’s written assent.

What is a Short term Rental Agreement?

Tenancy agreements and short term rental agreements are extremely similar. The term of the contract is where there are the largest distinctions between the two.

A short term rental agreement, as opposed to a tenancy agreement, offers occupancy for a shorter period of time, often 30 days.

Tenancy Agreement vs. Short term Rental Agreement: Pros and Cons

Depending on the type of landlord-tenant relationship you’re looking for, the benefits and drawbacks of any particular contract fall into a few distinct categories.

Let’s begin with the pros and cons of a tenancy agreement:

Pros Of A Lease – A tenancy agreement could be the best choice if stability is your top goal. Because they are designed for secure, long-term tenancy, tenancy agreements are frequently preferred by landlords over short term rental agreements. A more stable rental revenue stream and lower turnover expenses are usually the result from renting to a tenant for at least a year.

Cons Of A Lease – Nevertheless, once a tenancy agreement is signed, the monthly rent is fixed until the end of the term. A set rental price for 12 months might mean you lose out on a sizable amount of additional revenue from market rises in a region that is developing and where property prices are steadily rising.

Conclusion on Leases – A tenancy agreement is an excellent alternative for landlords seeking a steady income, but it may have a detrimental influence on profitability if property values increase during that year.

Let’s now look at the pros and cons of a short term rental agreement:

Pros Of A Rental Agreement – Because a short term rental agreement is typically just temporary, there is considerably greater latitude for rent increases. Technically, rent can be changed monthly with a short term rental agreement to keep in line with the current fair market rent.

It’s crucial that your renter is aware that a short term rental agreement gives the landlord the right to raise the rent from month to month.

For a tenant who can’t commit to a 12-month lease term, a short term rental agreement is suitable.

Cons of a Renting Agreement – The flexibility of a month-to-month lease, which might subject a renter to frequent rent increases or indefinite rental terms, may frighten away a tenant hoping for a long-term lease. The expenses associated with more frequent tenant turnover, such as those associated with advertising, screening, and cleaning, should also be considered by landlords. Furthermore, if your rental is situated in a neighborhood with lower occupancy rates, you can find it challenging to maintain a long-term tenant.

Conclusion on Rental Agreement – In regions with high tenant turnover, like college towns, city centres etc a short term rental agreement may be a viable choice for landlords that prioritize flexibility.

CONCLUSION

It is crucial that you are aware of who your renter is before you provide a tenancy agreement or short term rental agreement.

The estate agent will undertake a physical inspection of the property. Before the physical inspection, they investigate the location and analyze the local area to see if anything might influence the value before they arrive at their valuation.

Leasehold Ownership: Key points to be considered

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.

How To Negotiate a New Rent Rise | Trick Revealed

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.

What is an RICS surveyor?

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.

What is an RICS surveyor

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 of your leasehold house

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 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.

Free Consultation

Call 01753 542984 for a FREE 10 minute consultation on your lease
extension or freehold purchase.

Leasehold Valuations
×

Are you sure you want to leave us so soon?

We could save you £XXX. Why not have a free 10 minute consultation?