Buying a leasehold property - how does the conveyancing process work?

Conveyancer checks

Once you’ve made an offer on a leasehold property and it’s been accepted, your conveyancer will be sent a draft contract pack from the seller’s conveyancer. This should include all the relevant information about the lease, including how long it lasts for and any conditions that are written into it.

It’s up to your conveyancer to scrutinise the lease carefully and to make sure you are fully aware of any obligations or rights you may have under it. They’ll also need to find out any charges you’re likely to have to pay. Your conveyancer will need to check with the freeholder that the existing leaseholder doesn’t have any outstanding charges left to pay before you take over the property.

They’ll also need to find out whether there are any disputes between the freeholder and the current leaseholder, for example, because the freeholder hasn’t carried out repairs that they’re responsible for. Your conveyancer will check whether there are any planned improvements to the property, and if you’ll be required to contribute to the cost of these. For example, if you’re buying a leasehold flat, and the freeholder wants to re-carpet and decorate all the communal areas in a couple of years’ time, they may require you to pay a share of the costs.

If you’re buying a leasehold flat, the freeholder or their managing agent will need to provide your conveyancer with a copy of the block buildings insurance policy. Your conveyancer will make sure you’re aware of the freeholder’s obligations, such as maintaining the structure and exterior of the building.

How long is the lease?

Most leases last for between 99 and 999 years. If your lease is for a shorter period, say 80 years or less, and you’re planning to live in the property for a while, your conveyancer may want to establish whether you can extend the lease at a later date, or whether there might be an opportunity in future to purchase the freehold.

In some cases, leasehold owners with properties in the same building club together to buy the freehold and set up a management company to look after things such as maintenance and insurance. If that has happened with the property you want to buy your conveyancer will need to check the company accounts and documents and arrange for the current owner’s shares in the management company to be transferred to you when the sale completes.

Bear in mind that buying a property with a short lease, typically one under 70 years, could affect your chances of getting a mortgage, as some lenders require a minimum lease length. This is usually 80 years or longer, as properties with short leases can be much harder to sell. Speaking to an L&C mortgage adviser can help you find out if this is a viable option for you.

Other searches

As well as these checks, your conveyancer will need to conduct all the usual searches associated with any property purchase, whether it is leasehold or freehold. These include Land Registry searches, local authority searches, environmental searches, water authority searches, and location specific searches.

This is so they can find out whether, for example, any alterations which have been made to the property conform to building regulations, or if there are any issues in the area which you should be aware of, such as the proposed construction of a major road nearby. If your conveyancer has any queries, they will then contact the seller’s conveyancer and ask them to clarify any information which isn’t clear.

Costs

As buying a leasehold property involves more checks than for a freehold property, your conveyancing costs are likely to be higher. The legal process will usually take longer too, so you can expect to wait around 15 to 18 weeks, or sometimes longer, for your leasehold purchase to complete.

Remortgaging a leasehold property

If you’re looking to remortgage a leasehold property, your lender will require some additional checks by your conveyancer that aren’t needed if you’re remortgaging a freehold property.  

Ground rent and service charges

Your lender will want evidence that any ground rent or service charges you’re liable for are paid up to date, so they’ll need a statement from the freeholder showing that nothing is outstanding.

Any expected increases in ground rent or service charge

Your conveyancer will also have to supply your lender with information about any major works that may be planned for the property. For example, if all leaseholders in your property are going to have to pay to replace a worn-out lift in the next few months, the lender will want to know how much these repairs are likely to cost, and whether you’ll be able to afford them without this affecting your ability to pay for your mortgage. Lenders are more cautious about checking this information now due to high and increasing ground rents and service charges.

Copy of block buildings insurance policy

Buildings insurance is compulsory when you take out a mortgage, so your lender will need to see a copy of the buildings cover for the block or house you live in.

Things to think about before you buy a leasehold

1. The current service charge and a copy of the latest annual service charge accounts: You will receive a breakdown of spending that you or your conveyancer can review. If costs have gone up significantly, ask for an explanation.
2. The ground rent and any details of how it increases: A sharp increase in annual costs is a warning sign. Be careful if there are less than 80 years left on the lease, as renewing it will be more expensive. You will have to pay the increase in the value of the property after the lease has been extended.
3. Are there any major repairs planned? Check if there are any major repairs planned in the near future or if there is a long-term maintenance plan available. You will need to pay for any major repairs, so find out what is planned or needed before you buy, not after.
4. The freeholder and managing agent names: Know the name of the freeholder and managing agent so you can look them up online. Some might have a bad reputation. Get a copy of the fire risk assessment and find out the height of the building in metres and storeys. The fire risk assessment will show if any improvements are needed, and the height will tell you if the Building Safety Act applies.
5. Any hidden rules? The lease may have rules about how you can use the property. For example, pets might not be allowed, you may not be able to rent it out, or you may not be allowed to remove internal walls.

Speak to an L&C mortgage broker

If you're considering buying a leasehold property, our expert advice can guide you through the process. Speak to L&C today for fee free advice and compare mortgage deals to find the best option for your situation.