A note of caution for leasehold owners

December 30, 2012

Landlord Information

A recent news article* has highlighted yet again some of the issues that might be associated with leasehold properties.

In the report in question, the freeholder appears to have made staggeringly high charges simply for providing a letter of consent relating to renovations and improvements to some of the leasehold properties concerned.

Whether or not such instances are more commonplace than is currently believed is perhaps open to debate, however, what is not disputable is the need to fully understand all of the conditions associated with the respective rights of you, as a leaseholder, versus those of the freeholder.

If surprises arise, the result might be, as in this case, very expensive.

Although your solicitors will typically provide appropriate guidance relating to the lease you are purchasing, it is important to clarify yourself through direct questions, issues relating to residual freeholder rights and the financial consequences that might arise for you as a result.

Occasionally, landlords can become a little too focused on the property and commercial opportunities it offers rather than the liabilities that it brings with it. Property is inevitably a risk and that is why it is important to obtain a suitable buy to let insurance quote in order to mitigate some of the financial aspects associated with that.

Of course, no landlords’ insurance policy is ever likely to reimburse you for charges you may have incurred from the freeholder!

Not only are potentially hidden freeholder rights important to understand but the very basic commercial issues associated with a leasehold need to be constantly at the forefront of your attention. Remember that the shorter the period of the residual lease is, the more difficult you may find it to sell the property on in due course.

In the particular case in question, the article suggests that the freeholders concerned started to behave responsibly only after the involvement of the BBC and a team of investigative journalists helped by the local residents’ association.

In other situations, without the help of a national media organisation behind you, you may find it rather difficult to obtain a sensible solution and discover that the letter of the deed law will be all that counts.

The moral of the tale for landlords is clear. Once more, make sure that you and your solicitor have fully studied all of the implications associated with a leasehold property before you decide that it is right for you.

It just might help avoid you needing to make calls asking for the media’s assistance in future!

*Source:

http://www.bbc.co.uk/news/uk-england-essex-20446533

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