Buying a Leasehold Property – What Do you Need to Know?
What is the difference between a Freehold and Leasehold Property?
If you purchase a Freehold property, then you will own the property outright for an indefinite period. Most Freehold properties are houses, however in some instances you can purchase Freehold maisonettes.
By contrast, if you own a Leasehold property then you will only own the property for a specified term of years, which will be defined within the Lease. Leasehold properties tend to be flats and apartments.
By purchasing a Leasehold property, you agree to comply with the covenants, restrictions and conditions referred to therein. You will also be granted rights by the Freeholder and will be subject to rights reserved over your property.
Following the end of the term of the Lease, the Leasehold property then reverts back to the Freeholder if the Lease term is not extended.
Why is a Leasehold Information Pack Required?
If you are purchasing a Leasehold property, the sellers' solicitors will be required to provide the buyers solicitors with a Leasehold Information Pack or complete an LPE1 form.
The information pack will contain a number of useful documents and answer several standardised questions which are provided and completed by the Freeholder and/or Management Company or Managing Agent.
The pack will include important information relating to the purchase property, such as information regarding planned major works, service charge and ground rent accounts and information regarding any disputes.
Further information about post-completion requirements will also be provided alongside information regarding the management of the development as whole.
Why can Leasehold Properties take longer to proceed to completion than Freehold Properties?
When purchasing a property, your solicitors will need to review the Contract and Title documentation provided by the seller's solicitors and submit searches to review alongside your mortgage offer (if applicable).
Leasehold properties can take longer to complete, due to the need to review additional Title documentation, including the Lease, and the above-mentioned Leasehold Information Pack. Usually, additional enquiries will need to be raised with the Freeholder, Management Company, Managing Agents or Residents Association, and this can cause delays in a transaction.
In some transactions, the Lease may need to be varied or the term of the Lease extended and this can also cause significant delays if required.
For individual advice and assistance please contact our Residential Property Team to find out how we can help.