Leaseholder consents: understanding your lease terms

When completing the purchase of your new home, particularly where a property is held on a long lease instead of freehold, it is often easy to let the finer details pass by unnoticed as you focus your attentions on getting the keys and moving in. However, before you even exchange contracts it is important to read carefully through the lease and, if possible, meet with your solicitor to discuss the aspects which may impact on how you deal with the property.

Points you should look out for include:

Who is your landlord and is a management company party to the lease as well?
You need to check to whom you are liable to pay rent and who you will be dealing with. If there is a management company made up of other tenants of the development, as a new tenant you may also take a share of the company with your purchase. Make sure you know who is responsible for looking after public parts of the building or development, including estate roads, car parks and lifts (if relevant).

What rights does the property have the benefit of?
These may include rights of access and rights of way over common areas such as driveways, paths, stairways and lifts. You may also be grated parking rights in a designated area. Whilst you won’t own these areas, you will be able to cross and use them in order to access your own property. Rights may be restricted; for example, you may only be able to use a parking space to park a private car so this cannot be used for commercial vehicles or caravans.

What are your lease obligations?
You will undoubtedly need to agree to pay your rent on the days it falls due. ‘Ground’ rent is a nominal sum payable each year to a landlord under a long lease (typically, a ‘long’ lease could be for any period from 99 – 999 years). Ground rent sums may increase every so often; your solicitor should advise you as to what you are required to pay and when.

Most leases of flats and apartments contain service charge provisions; some leases of houses will also where a management company has been set up to deal with maintenance of public open spaces, adopted roads and other common areas of an estate. Tenants are required to pay the sums demanded and, in return, the landlord is obliged to provide the services as set out in the lease. Your seller or the developer should advise you from the outset as to what you can expect to pay in service charge.

Landlords and management companies also often reserve a right to require payments to be made towards their administration charges and expenses.

What alterations are you permitted to carry out and are any consents are required?
If you have a lease of a flat, you should expect an obligation not to carry out any structural alterations to the property as these may affect the structural integrity of the building as a whole.

Alterations clauses should be more flexible in leases of detached properties but it is common for long leases to require the tenant to obtain the consent of the landlord to any alterations they wish to carry out which extend the property in some way. You will also need management company consent if one is party to the lease.

Alterations may include extensions, the addition of conservatories or any other building works which increase the footprint. Depending on the lease, alterations such as loft conversions may also require consent. Your solicitor should talk you through what works you are able to do but make sure that you go back to check your lease at a later date before you start any works if you’re not sure.

Under the lease, you will likely also need to ensure that all the appropriate planning permissions and building regulations consents are obtained to the works you are carrying out. Make sure that you keep hold of all relevant documentation as you will need it when you come to sell.

If consents to works, or planning permissions and building regulations consents, are not obtained, this can lead to problems later. Indemnity insurance policies may need to be purchased to cover any risk arising as a result of missing documentation and this can not only cause a delay on a sale but may put off potential buyers or lenders.

Are you able to sell the lease and, if so, is consent required?
It should be expected that any long lease will contain the ability for a tenant to sell it. However, again it is likely that the consent of the landlord and, if relevant, the management company will be required. They may reserve the right to refuse consent if any rents or service charges are unpaid; in this instance, expect settlement of any arrears to be a condition of consent being granted on the date of completion.

McCarthy Bennett Holland has an experienced residential conveyancing team which can advise on lease terms and will manage your sale or purchase efficiently.