David Gilman is partner in charge of Blacks Connect
There is a major problem coming home to roost around leasehold properties, and it dates back to the 1970s. During that decade a large number of 99-year leases were granted on properties, many of which were in the London area, on flats for example, but also in cities like Leeds and Manchester.
Like me, you may remember the seventies like they were yesterday, but some of these short leases now have just 60 years remaining.
This can cause a huge problem when it comes to leasehold transactions. In fact it’s a massive cause of hold-ups in the property chain. And it is something brokers need to be very wary of when they choose a conveyancing partner.
Imagine your client is buying a property with a 60-year lease remaining. It sounds like a lot, but lenders are increasingly restrictive about the minimum lease they will accept. Many won’t consider leases of less than 55 or 60 years for example.
This gives your buyer a potential problem. Assuming they plan to live in their new property for the next few years, they could find they can’t easily sell it on, because no lender is willing to offer a mortgage on it.
For your client’s sake, this is a problem that needs to be dealt with now, not when they want to sell.
Why you need an expert
A specialist conveyancer, like Blacks Connect, is experienced in dealing with leasehold property transactions, and understands the complex negotiations that go hand-in-hand with these purchases.
The simplest option is to persuade the vendor to renegotiate the lease before the client buys, but it’s only possible if the vendor has the money to do that. They may prefer to reduce the price accordingly, in which case your client will need to know the cost of a lease extension, and be confident they can arrange one with the freeholder.
There are plenty of finer details that need working through, such as the vendor assigning the benefit of having lived in the property for over two years to your client – essential if they want to extend the lease in the near future.
That’s just one of the potential complications and realistically a short lease property transaction will hold up the purchase, and the whole chain.
You can expect a delay of around four months to come to a satisfactory conclusion, but it could take longer.
One thing is for sure, the process will be made quicker and easier with the help of a conveyancer that really knows their stuff. A local solicitor that does five conveyancing cases a year is, frankly, going to be out of their depth on complex lease negotiations.
Be wary of this when you are choosing a legal partner. Even if you have an ongoing relationship with a law firm, it makes sense to choose a specialist conveyancer for those cases that are a bit more complex, like leasehold sales.