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Buying a leasehold property

This content applies to England & Wales

General points to note when buying a leasehold property.

The legal aspects of buying a leasehold house or flat are broadly the same as when buying a freehold property (see the other pages in this section for details) but the following points should be noted.

General conditions of leasehold

  • the lease contains everything that was agreed between the freeholder and the original leaseholder (see the page The lease in the section on leasehold property for details). When the property is sold, the lease is passed on or assigned to the new leaseholder, and s/he will be bound by what was originally agreed. It is therefore important that the purchaser checks what is said in the lease before buying
  • the terms of a lease may be varied by a deed of variation, which is an agreement subsequent to the lease by which the freeholder and leaseholder agree to vary terms in the lease, such as the extent of the property, the duration of the lease, or service charges. The lease must be read together with variations. Most leases will have been registered at the Land Registry, and where this is the case, any variation should also be registered. To establish the full position, it is necessary to check the registered title and obtain copies of any variations of the lease as well as the lease itself. See the page Changing the terms of the lease in the leasehold property section.
  • there may be an annual service charge payable to the freeholder or her/his agent for management and maintenance of the property etc (see the section Service charges for further information). When buying an existing property, purchasers should check if these service charge provisions have been operated fairly in the past. The purchaser should expect to see three years of service charge accounts. Some leases separate out certain costs, such as insurance, as a separate charge payable by the leaseholder
  • provisions in the lease may permit the ground rent charged to be increased as time passes. A purchaser should check how these increases can be made.

Flats only

  • it is important to find out about the ownership and management of the flat. As documentation is usually complex, it is usually necessary to take the advice of a qualified adviser
  • where the flat is in a block, it is particularly important that it is managed efficiently and in the interests of all the leaseholders. When purchasing an existing lease, enquiries should be made into past management practice. When it is a new property, the paper work needs to be fully explained to the purchaser
  • leases and management structures for flats vary greatly and therefore it is important to refer to the agreement. The main areas to look at are:
    • the methods used for recovering service charges
    • who is responsible for maintaining the fabric and structure of the building
    • future major outgoings such as replacing lifts and re-roofing and the provisions made for this
    • provisions for the maintenance of the shared parts of the property
    • obligations of individual leaseholders and whether these can be easily enforced
    • the arrangements for insuring the building and for charging this to leaseholders
    • restrictions on uses or activities that the purchaser may have in mind, for example business use or subletting.

The purchaser or her/his solicitor should obtain information from the freeholder or managing agents about anticipated works and about service charges and insurance in recent years.

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