Leasehold Properties and the Conveyancing Process
Why is my flat leasehold?
Flats are two or more dwellings contained within the same building. This requires a large amount of interconnecting rights, reservations and covenants so that every flat owner has the rights they need to occupy and maintain their flat while minimising inconvenience to others.
A right is a right to do something. A reservation is a right for someone else. Covenants are the “do’s and don’ts” of occupation and govern the day-to-day use of the flat. Typical covenants are to pay ground rent, to keep the flat in good repair, or to not keep pets.
Some Court judgements in the 1970s decided that covenants between freehold properties are harder to enforce than covenants between leasehold properties. Mortgage lenders declined to lend on freehold flats and they soon became unsellable. Nowadays, flats are leasehold.
What does it mean if my flat is leasehold?
Leasehold ownership means that you have the right to occupy your flat for a given length of time, subject to certain payments, usually ground rent and service charge.
Leases of 99 years or more are, in many respects, as good as a freehold, but in other respects, they are not:
Other parties have interests in leasehold properties, most obviously the freeholder. In some developments, a management company also has an interest.
Lenders generally require that a lease has at least 80 years to run. Shorter leases can be extended, but this can be costly.
A lease usually requires payment of rent (although this may be as little as the traditional nominal amount of “one peppercorn if demanded”).
A lease can be terminated, whereas a freehold cannot.
My flat is “share of freehold”. What does that mean?
In some larger blocks of flats, the freehold has been acquired by a Company in which the residents have shares. This means that effectively the residents are both landlord and tenant, but the flat is still leasehold and the terms of the lease still apply. The benefit is that overall control is with the residents rather than an external landlord, but it does mean that some tenants have to volunteer as directors.
In smaller blocks, typically houses that have been converted into flats, the leaseholders are jointly the freehold owners. The terms of the lease still apply.
The solicitors in the Conveyancing department at MJP Law can guide you through these complicated documents. For more information contact conveyancingteam@mjplaw.co.uk.
