Selling Leasehold Properties

Why do conveyancers charge more for leasehold sales?


The lease

Congratulations! You have just accepted, or have had accepted, an offer on a property. Contact TP Legal to obtain a conveyancing quote and we will send you out our paperwork (even by email if you prefer). In a standard transaction involving a marketed property your agent will now forward a memorandum of sale to both parties’ solicitors. The memorandum of sale will set out the parties’ and solicitors’ contact details, the purchase price and any other items that have been discussed such as any items included in the sale. This document is not legally binding and will be reviewed to check that it is correct.

In return, the leaseholder must pay the rent, service charge (if any), estate charges (if any) and insurance rent due on time and must comply with all landlord and management company rules and local government notices served on the premises.

The lease usually includes many restrictions (known as restrictive covenants) restricting your use of the property, such as not to sublet, make internal alterations, or to sell the lease without the landlord’s permission

The lease should include a coloured plan which will identify the extent of the building or estate that the landlord owns, the boundaries of the property being leased to you (usually a floor plan), communal areas, common access routes to and from the property and an internal layout of the property.

Although leases follow a generally recognised format not all leases are the same. Some have many more restrictions on what you can and can’t do with the property.

It is not unusual for a lease to have been granted to a first leaseholder in say 1980 to run for 125 years . If you are selling a property with an existing lease such as this the buyer’s conveyancer could advise that the lease is missing information to make it acceptable in modern times to both the buyer and any current or future bank or building society lending money against the property (mortgage).

As your conveyancers we can identify at an early stage what permissions you will need to obtain to provide to the buyer’s conveyancer in order to prove you can legally sell your property. We can also advise you on how best to deal with any lease discrepancies, missing clauses or where you wish to sell a property where the lease term of years needs extending (see our page on lease extensions).

The leasehold information

When you instruct us to sell a leasehold property we will need to obtain information about the whole building (sometimes the whole estate) from your landlord to provide to the eventual agreed buyer.

Typically because the landlord, management company or managing agents will charge you a fee for their time to compile the information,it is important to include this in your costings at the very beginning.

The landlord’s information typically includes answers to a set of questions about you as a tenant (leaseholder) and whether your rent, service charge and buildings insurance payments are up to date, current buildings’ insurance details, the last three years’ service charge accounts and information about the building (or estate) management as a whole.

You might know most of the answers to the questions but for the buyer it is important that the answers are provided directly by the landlord or the landlords managing agents.

Sometimes you have to purchase the information from more than one entity. In larger buildings, usually where there are more than four flats or apartments the landlord will have appointed a management company to look after the management of the building and its common areas such as the hallways and parking areas.

In turn the management company might use managing agents to collect service charges from the tenants and look after the financials. This can increase the time and cost of obtaining the correct information required to sell your property.

Once the information is supplied to us by the landlord it is not simply a matter of forwarding a copy to your buyer’s conveyancers. The paperwork (typically 10-20 pages long but some larger well establish estate’s paperwork can be over 20 page long!) needs to be reviewed to check that the landlord has provided all information and see if there is any information you are unaware of which could affect the progress of the sale (such as future anticipated major works which could cost the buyer once he takes ownership of the property).

So you can see from above just how much extra work and how many different persons potentially your conveyancer has to contact to effectively sell your leasehold property. The sooner we apply for the information for you the more likely it will be that we can provide the buyer’s conveyancer with the information needed to advise the buyer to enter into a contract with you to complete the sale.