When purchasing a leasehold property, it is important to bear in mind that the Conveyancing process will take longer than the purchase of a freehold property. The main reason for this is due to a third party being involved – known as the Landlord.
When the Seller puts a Leasehold property up for sale, there is important information they need to pass on to the Purchasers solicitors that only the landlord can provide. This is more commonly known by the landlords as ‘The Leasehold Sales Pack, or ‘Sales Information Pack’. Unfortunately there are no laws that control how much a landlord can charge for these. On average, the fee’s for the Landlord Pack tends to be around £300-350 although this is entirely at the Landlord discretion.
The next issue a seller may encounter is the landlord’s turnaround time for providing the Leasehold Pack. Some companies can turn the information around in around a week, however, in some cases it can take a lot longer – possibly hitting the 4 week mark. This in turn can create frustration for all parties involved but our advice would be to pay your solicitor for the pack as soon as you have instructed them so that a cheque can be posted out in hope of a faster response. Please bear in mind that once the cheque has been forwarded to the landlord it usually becomes non-refundable as they may have started the work. In addition to this, sometimes there is a landlord who deals with the ground rent and a managing company who deals with service charge. In this type of scenario, it is not unusual to pay for a second Leasehold Information Pack.
For a purchaser, the landlord may also charge various fees. The can include items such as a Deed of Covenant Fee, a Notice of Transfer fee and a Notice of Charge fee. A Deed of Covenant is a document that the Purchaser would sign to say they will comply with the terms of the Lease. A Notice of Transfer and Charge are formal notices that are issued by the new Leaseholder (your solicitor will do this) as the Lease states the Landlord must be informed when the owner changed. The Notice of charge only applies where there is a mortgage as it is letting the Landlord know that a Lender has security over the mortgage.
It is important to budget extra funds when purchasing a Leasehold property as your solicitor cannot guarantee the landlord will not charge you anything extra. Furthermore, it is imperative to take into account that the Seller may have paid the service charge and ground rent in advance up to a date that is after your intended completion date. This would mean a Purchaser will have to reimburse the Seller for the service charge and ground rent from the completion date up until the date is has been paid.
For further information, please contact one of our property experts who will be happy to assist you.Talk to our legal team
The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal advice and should not be relied upon as advice. Please see our website terms and conditions for full details of our disclaimer. If you are interested in obtaining advice, please contact one of our lawyers who will be happy and able to advise you on your own particular circumstances.