A leasehold property, on a full repairing lease is, from the point of view of the survey, much the same as a freehold property**. The main difference is that the need to keep the property in good repair does not just depend on what is prudent but is strictly governed by the terms of the repairing clauses in the lease.
**A surveyor may have to inspect the outside of a large block to ascertain likely repairing liability even though the leasehold unit concerned may only be liable for a small percentage of the repairs to the whole of the exterior.
For this reason it is preferable for a copy of the proposed lease to be read and fully understood thoroughly by the prospective purchaser and / or their surveyor as well as their solicitor in order that their responsibilities and any particular liabilities may be taken into account when making an assessment as to whether to proceed to purchase.
Questions that should be addressed prior to entering into a commitment to purchase a leasehold property include:
- Terms: What are the terms of the Lease?
- Are there any covenants that affect the property?
- What is the apportionment of repair bills attributable to the property to be purchased?
- Freehold: Who is the freeholder?
- How many units are owned within the one freehold entity?
- What can the freeholder dictate under the terms of the Lease?
- Do the Leasehold Enfranchisement Acts apply?
- Ground Rent: What is the ground rent? When is it reviewed?
- Property Management: Who manages the property?
- Who pays for the management of the company?
- What are these costs? Are they reasonable?
- Are any sinking funds for long term capital repairs kept aside?
- Who addresses and maintains the external fabric of the building, the parking areas, the common parts etc?
These and many other issues may need addressing.
We recommend that you read and discuss the specific terms of the lease with an appropriate professional advisor.
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