Understanding Leasehold Arrangements in Chester: 3 Things You Should Know -
Are you looking to lease or have bought a new-build house on a leasehold basis?
Leasehold arrangements are one of the more complex processes in the world of property, but the good news is, Matthews of Chester are experts in the matter and can guide you through the complexities.
Usually, leases are for 99 or 125 years from when building of the property. And when the lease expires, the property returns to the freeholder. Properties for sale on a leasehold basis are becoming more and more common.
It’s an ever-changing market. So if you’re thinking of purchasing a leasehold property, here are three things you should know.
- What are the statutory limits on ground rents?
For flats, the freeholder (landlord) cannot request any more ground rent than what was set out in the lease agreement. New-build leaseholds are often subject to rent-escalation clauses. This means the freeholder may be in their rights to increase the rent charge.
Ground rent does not need to be paid unless formally requested by a landlord. And note that unpaid ground rent can be recovered going back six years.
Top Tip: Seek specialist advice to make sure you have everything covered. Get in touch today.
- Limited sale of new-build leaseholds
In recent years, there have been many unsettling cases related to new-build leaseholds. Many where the freeholder has sold the property to a third-party, after the leaseholder has moved in. And when the leaseholder applied to buy, they faced larger costs than they were expecting. There have also been cases where ground rents have doubled too.
Why has this happened? Because there was no legislation in place to stop it. If the property was a flat or apartment, then the leaseholder would be protected under the Exploitation of the Landlord and Tenant Act 1987. Under this act, flat leaseholders have the right of first refusal on the property. They are also protected against ground rent increases. But, for new-build properties, there is no such legislation.
New government measures have cracked down on unfair practice. This includes a ban on almost all new-build house leaseholds. There is also a requirement for independent legal advice to be sought for buyers.
- Extending the length of your lease
The 1993 Leasehold Reform Act gives those who have owned their flat for at least two years the right to extend their lease by 90 years. as well as reducing the ground rent to £0. However, there are a number of exceptions:
- the flat must be held under a long lease i.e. it was originally granted for a term of more than 21 years
- the flat must have been owned by you for more than two years. This date starts from when you are registered as the owner at the Land Registry.
Want to find out more?
At Matthews of Chester, we have the extensive experience and expert knowledge to help you. We have access to the very best legal contacts, specialising in leasehold legalities. For all aspects of leasing sales, lettings and property/block management, call us today on 01244 346 226.