Buying a leasehold property - how does the conveyancing process work?Our guide 'Buying a property - how does the conveyancing process work?' explains the legal steps involved in buying a property.
If you’re buying a leasehold property, your conveyancer will need to go through a few extra steps before the property can be legally transferred to you.
This is because you’ll own the property in conjunction with the freeholder.
Here’s how the legal process for leasehold properties works. This guide covers properties purchased in England and Wales.
Conveyancer checksOnce 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 solicitor. 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.
For example, there may be ground rent and service charges you must pay as a leaseholder. 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. You can usually only extend the lease once you’ve owned it for at least two years.
In some cases, leasehold owners with properties in the same building club together the 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 solicitor will need to scrutinise 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. Changes have recently been proposed, which should make it easier for leaseholders to extend or buy their leases. Find out more about these here.
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.
Find out more about how leaseholds work in our guide 'Understanding leasehold vs freehold'.
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 solicitor has any queries, they will then contact the seller’s conveyancer and ask them to clarify any information which isn’t clear. You can find out more about searches in our guide 'What are solicitor searches when buying a house?'
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 12 to 14 weeks, or sometimes longer, for your leasehold purchase to complete.