When purchasing any property, it is essential to establish the type of ownership. Many buyers are unaware of different types of holds on a property, including freehold and leasehold.
It is important to distinguish between the two, as both types of holds come with their own rights and obligations. At Brown Turner Ross, we have provided residential property conveyancing for both freehold and leasehold properties, so we understand the rights you hold.
As a leaseholder, it’s vital to be well-versed in your rights and responsibilities. This article is your guide to gaining a comprehensive understanding of your rights, providing you with the confidence to manage your leasehold effectively.
What is a Leasehold?
Unlike a freehold, which owns both the property and the land on which it is built, a leaseholder owns the property but not the land.
Another distinction between the two is that when you own a freehold, you own the property forever, but with a leasehold, the contract is only in place for a set amount of time, which is typically between 99 and 999 years.
The most popular example of a leasehold is owning a flat or apartment. In this case, you own your specific residence, while your landlord owns the land and communal areas in the building.
Leaseholder Rights
If you are considering entering a leasehold, you should first understand your rights as a leaseholder. You have more rights than you may expect, and here are some of the more important ones.
Before considering your rights as a leaseholder, you should first consider some of the reasons why you need additional security, such as your service charge.
What is a Service Charge?
A service charge is a payment that a leaseholder makes to their landlords to cover services and repairs required under the lease. This charge covers communal aspects of the leasehold, such as building management, upkeep and maintenance.
The property manager usually predetermines the service charge and considers the cost of running the building for the previous years and any anticipated costs for significant works.
The Right to Information About Your Landlord
Under section 1 of the Landlord and Tenant Act 1985, you can request information concerning your landlord or managing agent, including their formal address, as well as their full name and payment address.
If your landlord or managing agent has not provided this information, their demands may be considered void.
The Right to Challenge Unnecessary Building Works
Naturally, if you own a property in an apartment complex, some building work must occur. If a landlord plans to carry out work exceeding £250 of a leaseholder’s service charge, the leaseholder has the right to request a complete consultation process.
Section 20 of the Landlord and Tenant Act 1985 covers this and ensures that all money is used for the proposed purpose.
If the planned work impacts your property or disrupts your day-to-day life, you can request to discuss it further.
The Right to Challenge Service Charges
If you believe a service charge is unsatisfactory or the price is unreasonable, you have the right to challenge it. You can initiate this process by applying to the First-tier Tribunal in England or the Leasehold Valuation Tribunal in Wales.
This ensures that the service charge system is not being abused and all parties are protected.
The Right to Ask How Money Is Spent
You are well within your rights to request a breakdown of service charges, along with receipts and invoices to prove how the money is being spent. Once requested, the freeholder then has a month to provide this information.
If the costs do not add up or you believe that some information is missing, you can sue the freeholder to reclaim the money you have lost.
The Right to Buy The Freehold
If the freeholder is looking to sell their property, the leaseholder has the right to purchase it and should be offered the first refusal.
If you live in a flat or apartment complex, at least half of the residents are expected to be willing to participate in the purchase. You will either need to set up a company or nominate one resident to become the ‘nominee purchaser’ and take charge of the purchase.
Negotiations are expected to occur, but if the freeholder is resistant to selling or all involved parties cannot agree on a cost, you can go to a tribunal.
If you decide to buy a freehold, you should involve a solicitor to ensure everything is above board and you have the correct eligibility.
The Right to Extend Your Lease
Once a lease officially ends, full ownership of the land and building returns to the freeholder. This can be a controversial aspect of leasehold because even if you have paid off your mortgage, the property will still return to the landlord.
A leasehold with less than 100 years remaining can pose challenges when passing down the property and attempting to remortgage or sell it, so you have the right to negotiate a lease extension with the freeholder.
Remember, it is always best to employ the support of a solicitor to ensure the best outcome.
The Right to Insurance Information
As a leaseholder, you will typically contribute to building insurance and any other insurance that may cover elements of the building.
If you want to confirm where you’re contributing, you can request a summary of the insurance costs you pay to ensure you know exactly where your money is being invested.
Leaseholder Obligations
With the rights you have as a leaseholder, you also have responsibilities and obligations to fulfill. Here are some of the commitments that you can expect as a leaseholder.
Repairs
You are expected to cover the cost of any repairs that your property may require. This includes, but is not limited to, plumbing, paintwork and general maintenance.
Any problems that you may have within your property are not covered under your service charge, and so you are responsible for the cost of repair.
Making Payment
As a leaseholder, you are responsible for paying your service charges and ground rent on time, or you could receive consequences.
You may also be expected to contribute to a reserve fund depending on your leasehold type.
Access
You must allow the landlord or property manager to access the property to make necessary repairs or in an emergency. This is for the safety of the building and its inhabitants, though you should expect to receive notice for any entry into your property.
Maintaining the Condition of The Property
If you live in an apartment or flat complex, you are responsible for keeping your property in good condition to maintain the building and respect fellow leaseholders.
Understand Your Rights With Brown Turner Ross
If you want to learn more about leaseholds or if you’re looking to buy or sell your property, we are Liverpool and Southport’s trusted conveyancing solicitors, and we can provide you with the assistance you need.
Contact our team to see how we can help you take the next steps in property ownership.