Tag Archives: Info for leaseholders

Who is responsible for maintaining the structure of the building?

 

If you live in a freehold property, the answer to this question is simple – if you own the part of the property in question, you are responsible for repairing it.

In a leasehold property a similar logic applies, but you must first establish which bits of the property you own and are therefore also responsible for repairing. This is because with a leasehold property there can be a number of important distinctions between the ownership of a part of the property and the legal responsibility to repair it.

In most leases, the flat owner owns the internal parts of their own flat – for instance, the plaster surfaces of the walls, the floorboards and the ceiling plasterwork. However, the structural or main parts of the building usually belong to the freeholder who has the legal responsibility to maintain and repair them and recovers the cost of doing this via a ‘service charge.’ The proportion of the service charge that you pay might also depend on the size of your flat although this depends on the way in which the leases in the building are written.

There are also some fairly common leasehold arrangements, where the property is effectively divided into ‘layers’ and in which each flat owner is responsible for maintaining their ‘slice’ of the property – both inside and out. This in theory at least makes redecoration and repair of the exterior an interesting exercise and you would hope that the flat owners would co-ordinate in terms of both timing and colour!

This type of arrangement is particularly common in maisonette or ‘one up one down’ type properties – often  in leases granted in the 1970s .

In these ‘maisonette’ leases, it often also turns out that the top floor flat is entirely responsible for maintaining the roof and the ground floor flat is entirely responsible for the foundations.

If your lease has this kind of arrangement then often the only obligation to the freeholder is to pay a ‘ground rent’ – as the insurance of the building is also in the hands of the flat owners. This is at odds with the more frequently found ‘service charge’ type of arrangement mentioned above where the freeholder insurers and the flat owners reimburse the cost of this.

With a leasehold property, the starting point for answering any question about responsibility for maintenance and repair is the lease document itself.

Leases are not always easy to understand and it may help to get professional help in understanding and interpreting the terms in your lease, particularly before commencing major works, or incurring large expenditure as problems can arise if you carry out work on areas that are not owned by you, or that require the consent of the freeholder to carry out work.

If you do require assistance with this sort of issue a specialist solicitor, such as a member of the Association of Leasehold Enfranchisement Practitioners (ALEP) will be well placed to provide you with help and practical guidance on these matters.

Am I a qualifying tenant for lease extension?

In order to qualify for a lease extension you need to own a ‘long lease’ of a flat.  A ‘long lease’ is a lease that is granted for more than 21 years originally (regardless of how long the lease is now).  You need to have been the registered owner of the property at the Land Registry for at least 2 years.

Subject to these conditions, you can bring a claim to an extended lease.  There are no restrictions on who may bring a claim and therefore a company or an individual or a trust can claim an extended lease, subject to 2 years’ ownership and the property being a long lease flat as stated above.

Will the ground rent increase after a lease extension?

If your lease is extended under statute the ground rent will be reduced to a peppercorn (i.e. nil). There will be no more ground rent to pay and the lease will be extended by 90 years on top of the unexpired term of your existing lease.

In other words, if your lease was originally 50 years long the new lease would be 140 years, with no ground rent for the remainder of the term.

If you agree a voluntary deal with your landlord/freeholder to extend the lease then it is possible that the ground rent will increase and there are no controls over what kind of ground rent parties may agree.  Typically the ground rent may be in a schedule, something like £200 to £300 per year increasing at 25 year intervals for the duration of the lease term.

It is also possible that a new ground rent proposed by the freeholder could review to a fraction of the open market value of the property, or to a much higher compounded sum of money in which case independent advice should be taken from a valuer before committing to any transaction.

If the ground rent is deemed too high then in the future the property could become un-mortgagable.  Or, the ‘balance’ between premium and ground rent could be wrong. According to the statute, compensation for the loss of ground rent forms part of the premium payable. If there is a ground rent retained, then that part of the premium is no longer payable, otherwise the flat owner can end up paying twice for the same thing.

You should also consider whether decreasing the ground rent will increase the amount that would need to be paid if there were to be a claim to the freehold or subsequent claim to extend the lease, on the basis that the ground rent income would need to be capitalised out as part of compensating the freeholder.