Ten Tips for Reading Your Residential Flat Lease
Leases are long and complicated documents. Here are a few tips to help you navigate a typical flat lease.
Don’t worry about any “Prescribed clauses” at the front: These are required by the Land Registry and are present on all registered leases after 2005. They contain basic information which is of some use but is more for the benefit of the Land Registry than anyone else.
Find the Lease plan and have a good look at that before reading the text of the Lease.
Skim the definitions and interpretation sections: You are looking for the definition of the Property / Flat / Demised Premises, the Term (ie how long the lease is) and the Rent. It is also a good idea to work out what the extent of the “common parts” is. Remember, the definitions will still be there if you need to check them later. Sometimes they are split into “Particulars” and “Definitions” in which case the Particulars will probably contain all the information you need.
If not found in the Particulars or Definitions, the Rent and Term will be in the “demise” which is the clause that states that the Landlord lets the property to the Tenant.
The Property definition may refer to a Schedule. Go straight to that schedule and find what is included and excluded from the Property you are buying. If it helps, refer to the plan.
Have a brief look at the rights granted and reserved, which are most likely in two further schedules. Most of this should be fairly standard rights of way, passage of services etc. Rights of way may refer to colouring on the plan and you want to check that the correct area is coloured.
Find the Tenant covenants. These are the do’s and don’ts that affect your day-to-day occupation of the Property. In older leases they are usually the next clause after the demise. In newer leases they are often moved to a Schedule. There can be a lot of these, and it is important to understand them. Sometimes there is a separate clause or Schedule of Regulations, which are also do’s and don’ts.
Find the Landlord covenants. There are generally a lot fewer of these than tenant covenants. It is essential that there is a covenant for “quiet enjoyment”. If the covenants are in a Schedule, this covenant is sometimes separated and included as a clause in the lease itself. Other than this, the important covenants are for the insurance of the building and the maintenance of the common parts.
The lease may have lengthy provisions for service charge. It is important to understand how the service charge is calculated and invoiced, but the rest of these provisions are less crucial.
The lease may provide for rent increases. These should be not more than every 25 years, and it should be easy to work out what the new rent will be. Many rents are linked to inflation, which mortgage lenders are not keen on, leading to problems and delays while problems are resolved.
The conveyancing team at MJP Law is experienced in reading leases and advising purchaser clients on their terms. For more information, please contact a member of the conveyancing team.