Leasehold flats can be in purpose-built blocks, in converted houses or above commercial or retail premises.
Leasehold ownership of a flat is simply a long tenancy, the right to occupation and use of the flat for a long period – the ‘term’ of the lease. This will usually be for 99 or 125 years and the flat can be bought and sold during that term. The term is fixed at the beginning and so decreases in length year by year.
The leasehold ownership of a flat usually relates to everything within the four walls of the flat, including floorboards and plaster to walls and ceiling, but does not usually include the external or structural walls. The structure and common parts of the building and the land it stands on are usually owned by the freeholder, who is also the landlord. The freeholder is responsible for the maintenance and repair of the building. The costs for doing so are recoverable through the service charges and billed to the leaseholders. That said all Lease’s differ so you will need to check your Lease for exactly what yourself and the Freeholder are responsible for.
The landlord can be a person or a company, including a local authority or a housing association. It is also quite common for the leaseholders to own the freehold of the building, through a residents’ management company, effectively becoming their own landlord. Furthermore under right to manage, the lessees may not own the freehold but are able to manage the building as if they were the landlord.
What are your contractual rights?
First and foremost, the right of peaceable occupation of the flat for the term of the lease, usually referred to as ‘quiet enjoyment’. In addition, the leaseholder has the right to expect the landlord to maintain and repair the building and manage the common parts – that is, the parts of the building or grounds not specifically granted to the leaseholder in the lease but to which there are rights of access, for example, the entrance hall and staircases.
What are your responsibilities?
Principally, these will be the requirements to keep the inside of the flat in good order, to pay (on time) a share of the costs of maintaining and running the building, to behave in a neighbourly manner and not to do certain things without the landlord’s consent, for example, make alterations or sublet. The landlord has an obligation to ensure that the leaseholder complies with such responsibilities for the good of all the other leaseholders. These rights and responsibilities will be set out in the lease.
What other rights does the leaseholder have?
Probably more than you think. There is a wide range of rights set out in the legislation and advice is readily available; however, where a dispute arises, the first step should be to ask the landlord or managing agent for full details and/or an explanation. These rights include:
Information: the landlord must provide his name and a contact address within England or Wales which must be stated on every demand for ground rent and service charges. Leaseholders can demand summaries of costs of the services, details of the insurance cover and have the right to inspect invoices for services and other documents. With each demand for service charges and administration charges there must be an accompanying summary of rights and obligations.
Consultation on major (qualifying) works: the landlord cannot carry out major works to the building where it costs any leaseholder more than £250 without first consulting the leaseholders in the proper fashion; if he fails to do this, he may not be able to recover all the costs.
Consultation on long-term agreements: the landlord cannot enter into certain agreements or contracts for any service over 12 months where the cost to any leaseholder is more than £100 per year without first consulting the leaseholders.
Challenging service charges: leaseholders can apply to the Tribunal to seek a determination of the liability to pay and reasonableness of the charges, whether already paid or not.
Challenging administration charges: leaseholders can apply to the Tribunal to seek a determination of the liability to pay and reasonableness of other charges arising from the lease in addition to the service charge. For example, consents for alterations and subletting, or fees for providing information
Right to manage: if groups of leaseholders who satisfy certain conditions want to change the management of their property, whether it is deficient or not, they can do so by using the right to manage. This is a ‘no fault, no compensation’ process that will allow leaseholders as a group to decide the management arrangements for the property. This right does not apply where the landlord is a local authority.
Appointing a manager: if the landlord’s management is deficient, then leaseholders can apply to the Tribunal for the appointment of a manager (except where the landlord is a housing association or local authority).
Extending a lease: an individual leaseholder who satisfies certain conditions can demand a new lease from the landlord, adding 90 years to the existing lease, with the price to be agreed between the parties, or, if this is not possible, set by the Tribunal.
Buying the freehold: groups of leaseholders who satisfy certain conditions can get together and enforce the sale of the freehold by the landlord to them, again with the price being agreed between the parties or, if this is not possible, set by the Tribunal.
Right of first refusal: in most cases, where the landlord proposes to sell his interest in the building, he must offer it to the leaseholders first or he can be prosecuted. There are some exceptions to this, including housing associations and local authority landlords.
Right to vary a lease: a lease can be varied at any time with the agreement of all interested parties. Otherwise an application can be made to a Tribunal on various grounds, which can include that it does not make proper provision for such things as the repair or maintenance of the building, insurance etc.
Neil Newstead, FARLA MNAEA
CEO – Oakfield Estate Agents