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- Leasehold Law
- Role of freeholder
- Repairing leasehold properties
- Leaseholder/freeholders responsibilities
A leaseholder is the owner of a leasehold property, usually a flat, but it can also be a house. Leaseholders are also known as 'lessees'. With a leasehold flat the leaseholder is the owner and often occupier of the flat and the freeholder is the owner of the land upon which the building stands and also owns the exterior of the property, the roof, foundations and common parts e.g the entrance hall and access areas.
Your rights and obligations as a leaseholder are contained in the lease to the property. This details the extent of your ownership, the rights you as an owner as well as any obligations (ie to pay any service charge) and any rules affecting the use and enjoyment of the property.
The lease looks very complicated; do I need to read it?
It is necessary when buying a leasehold property to understand the terms of the lease. Therefore it is recommended that your legal advisor explains the terms to you and that any problems or concerns you have are explained and resolved before you are legally committed to buy the property.
You can always get a copy of the lease from the Land Registry but it is useful to have a copy at home for future reference purposes. In a block of flats it is usual for all the flats to have a lease with the same terms except for anything which may affect your property only.
My lease is for a number of years; is this unusual?
Yes. A lease is always stated to be for a defined number of years. The length of the lease may vary from 99 to 999 years. The amount of time left on the lease reduces as the property is bought, sold and occupied by different owners. The number of years left on a lease can sometimes affect the ability to sell a flat if is considered to be too low for a mortgage company to accept as good security for any loan.
However there are rights for an owner in these circumstances to apply to extend (increase) the number of years left. If at all possible you should, generally, seek to extend your lease before it decreases to the extent that additional costs may apply.
Apart from the purchase price of the property, are there any other amounts I have to pay?
All leaseholders normally have to pay additional sums to their landlord/managing agents. Charges can vary from property to property and from year to year. The proportion of the total amounts which are payable are set out in your lease and may include:
- Ground rent for the land on which the property is built.
- A proportion of the buildings insurance arranged by the freeholder.
- A proportion of the service charge to pay for such things as cleaning and maintenance of the building and common parts e.g those parts of the building you share with others.
- A contribution to the 'sinking' fund – a long term fund to deal with future major works.
When purchasing the property your legal advisor should enquire if there are any large expenses anticipated for maintenance or refurbishment of the building.
The freeholder is the owner of:
- the land on which your property is built
- the exterior of the building, usually including the roof and foundations
- the common parts i.e. those parts of the property used by everyone such as entrance hallways, gardens and parking spaces.
The freeholder can be a company or an individual. Where the freeholder is a company it can be the leaseholders who own it each having a share in the company. This arrangement is usual where the flat is part of a converted building, such as a large house, and has a number of advantages for the management of the building.
The rights and responsibilities of the freeholder are contained in the terms of the lease. Generally, the freeholder will be responsible for:
- Insuring the property exterior of the property to include the usual risks such as subsidence. This insurance will not generally include the internal parts of your property.
- Repairs to the common areas of the building.
- Enforcing the covenants in the lease. This means that if any other leaseholder acts in a way that is prohibited by the terms of the lease, it is for the freeholder to take the necessary action where appropriate.
- Allow the leaseholder to enjoy the property (know as quiet enjoyment) and not to harass them.
- Collect the service charge as necessary for any repairs and maintenance to be completed.
If you do not know the name of your freeholder you can apply to the managing agent (where one is appointed) for the details or search at the Land Registry for the information.
The freeholder to my property wants to sell; can he do this?
Your freeholder can sell the freehold should they wish to do so. However in some cases the freeholder will need to give you the right of first refusal to buy the freehold. Generally the main requirements are:
- The building must contain at least 2 flats
- No more than 50% of the building can be used for business or other non- residential purposes.
- At least half of the building must be used/occupied by ‘qualifying tenants’. This is a technical term and can exclude some owner/occupiers.
Repairing leasehold properties can be a difficult matter. Much may depend upon the nature of the repair and maintenance and the management of that. In simple terms there are two types of repair, those which are general maintenance matters and happen on a regular and frequent basis and those which are more ‘one off’ and often exceptional such as repairs to the roof.
In all cases it is important to read and understand your lease as this will detail the parts of the property for which you as the leaseholder may have responsibility. This will usually include;
- All internal decoration to your property.
- All internal plumbing and wiring although it is always best to check your lease on this for exact details.
- Repairs to internal plasterwork and some joists.
- Internal window frames (but sometimes not the glass) but again check the lease as this can vary especially if double glazed.
The freeholder's responsibilities
The freeholder is generally responsible for:
- The fabric and structure of the building which will include the roof, foundations and guttering.
- The common parts to include the entrance, hallways, stairs/lifts, car parking spaces, refuse areas and communal gardens.
- The insurance for the building.
The leaseholders responsibility to contribute
Whilst it is your freeholder's responsibility to organise and arrange for those repairs for which he is responsible under the terms of the lease, this obligation is subject to the leaseholders i.e your requirement (again contained in the lease) to pay a proportion of the cost of any work.
This work can be ongoing regular repairs and maintenance or one off matters such as the roof. Under the Landlord and Tenant Act 1985 (sections 21 and 22) you have the right to request a summary of the service charge account and to see all receipts. This right applies to the last accounting year or the previous 12 months if there are no accounting years.
The sums required to pay for the work can be recovered as part of the service charge or can be taken from any 'sinking' fund. All charges for work done must be reasonable and it is possible in some cases to challenge the reasonableness before a First Tier Tribunal (property chamber. If you refuse to pay any charges levied by your freeholder it may be possible for the freeholder to commence court proceedings against you to recover outstanding sums and associated administration charges.
Work is going to be done to the building and I have not agreed to it; what can the freeholder do?
Your freeholder has a statutory duty to consult with all leaseholders in a building where works to the property are likely to cost more than £250 or more than £100 per flat and is part of a long term agreement. This obligation is contained within section 20 (20za) of the Landlord and Tenant Act 1985
The relevant notice must:
- Generally describe the work to be done or give details of a place where the details can be inspected.
- Provide reasons why the work is needed.
- Invite any comments within 30 days
- Invitation for nominations of businesses from which further estimates shousl be obtained.
In these circumstances your freeholder must give you at least two copies of estimates for the work and let you have the opportunity to comment and suggest other contractors where possible. Failure to comply with this procedure may result in your freeholder being unable to recover your share of the cost.
My freeholder is refusing to do any maintenance; can I do anything?
If your freeholder is refusing to do repairs required under the terms of the lease, then he/she is breaking the terms of that lease. You must obtain evidence of the failure to repair and you will need professional help to take any action. You may be able to start a court action which will require the work to be carried out.
I think my freeholders administration charges are too high; what can I do?
The right to challenge administration charges was introduced in 2002. These are charges which are in addition to any rent, insurance or service charges and very often are used for applications on to impose a penalty for late payment. Generally they are used for:
- Fees for the freeholder to grant approval to matters such as alterations to the flat.
- Provide copies of documents
- Costs arising from non payment of amounts under the lease.
- Costs connected with a breach of the lease.
Any such charge must be reasonable and should be accompanied by a summary of your rights as a leaseholder and your obligations in respect of the charges. If this is not included the charges may not be payable.
Other areas that may be of interest.