There are two common ways to own a property:
Freehold ownership
Every piece of land has someone that owns the freehold. For most purposes, the freeholder is the ultimate owner of the property and generally has complete control over their property (subject to laws and planning restrictions).
A simple example of freehold ownership is that most people who own and occupy their own house own the freehold title to that house. This means that they have control over the property and responsibility for repairing, maintaining and insuring it. Their only regular outgoings are likely to be council tax, utility charges and any mortgage payments.
Leasehold ownership
A freeholder (Landlord) can grant a lease to another person (leaseholder/tenant), allowing them to use and possess their property, or part of it, for an agreed period of time.
A lease will specify certain things, such as:
A lease is a contract. A landlord and leaseholder must comply with the terms of their lease. If you are a leaseholder and you do not comply with the terms of your lease, the landlord will have certain rights to enforce the lease. For example, they may be able to take you to court to require you to do something or stop you from doing something. In more extreme circumstances, the landlord may be able to bring the lease to an end and prevent you from continuing to occupy the property. You may be responsible for the landlord’s legal costs and interest on any money you paid late. Not complying with the lease is also likely to breach any mortgage agreement you have.
This is a legal document that can set out your defined shares and contributions to the property and the intentions of you both in the event of a change of circumstances in the future.
This is particularly useful if you wish to own the property in unequal shares, if you are unmarried, if you have received a gift from a relative or if you have contributed different sums to the property.
This document is usually drafted when you initially purchase property, but can be registered at any time.
Since 1 December 1990, it has been compulsory to register unregistered land at the Land Registry after it has been sold, transferred or mortgaged. However, it is estimated that over 25 million properties are not yet registered with the Land Registry. It is possible to register the property voluntarily which is recommended.
Risks associated with unregistered property:
It is entirely your responsibility to make sure that you know what condition the property is in, including all its fixtures and fittings. This includes making sure that you discover any defects there may be in the structure, wiring, central heating, plumbing, drainage, roof, etc.
If you have any friends who are surveyors or builders or who know what to look for by all means see whether they will look at the house with you (but remember that assurances from a friend that the house is sound give you no legal protection). Check the loft, take note of any footpaths or passages which affect the property, any other features which might give rise to concern, and See if you can work out the run of the drains; whether they are connected to mains drainage; and whether there is a shared drainage system.
The basic point to remember is that the seller will not be giving you any guarantees as to the condition of the property and it is up to you to satisfy yourself as to the condition of the house, fixtures, fittings, drains, etc.
Yes, we can arrange this for you. We will serve notice on the owner and send the relevant form to the Land Registry. The Land Registry will then register a Restriction on the Title so that the property cannot be sold without two registered proprietors. This can have benefits for tax purposes in that tenants in common can share income tax to utilise the lower tax brackets of the joint owners.
When you own a property jointly, you can own the property as joint tenants or tenants in common.
Joint Tenants
This means that you own the property jointly in undivided equal shares. In the event of the death of one of you, the deceased person’s share will pass to the survivor(s) and will belong outright and absolutely to the survivor(s) regardless of any other provision you may have made either in your Will.
Tenants in Common
This means that you own the property in divided shares. In the event of the death of one of you, the deceased person’s share will not automatically pass to the survivor(s) but into the estate of the deceased person to be dealt with under the terms of their Will. If they have not made a Will then the share would be dealt with in accordance with the Intestacy Rules.
Even though you can pay a lot of money for a leasehold property, there are ongoing costs during its lease. Freehold properties do not have these ongoing costs.
Due to the extra issues relating to rent, service charges, investigating the freehold and leasehold titles and dealing with managing agents, leasehold properties can often take longer to buy and sell and the conveyancing costs are usually more than for freehold properties.
Ground rent
The most common is the ground rent, which is usually a small amount of money of between £50 and £250 a year paid to the Freeholder. Although there are usually modest increases in ground rent over the course of a lease, some unscrupulous Freeholders write clauses into leases that ramp up the ground rent considerably as time advances, so be aware!
Sinking funds
Freeholders and their managing agents, particularly in blocks of flats, will ask their Leaseholders to pay into a sinking fund, which is like a savings fund to pay for major items such as a new roof.
Service charges
Leaseholders may also be asked to pay a service charge, which will be for the upkeep of the communal areas such as the corridors, or the maintenance of facilities such as a garden. Service charges are by their nature variable. Your conveyancer will want to see 3 years’ service charge accounts to check that the services are being provided at a reasonable cost. Service charges are usually administered by managing agents and most charge a fee for answering questions and providing accounts information.
Lease extensions
As a lease runs out of time, ideally before it hits 80 years or under left to run, most Leaseholders will extend their leases with the cooperation of their Freeholder. Although, they need to have owned the leasehold property for at least 2 years to do so.
The cooperation of the Freeholder comes at a price and as a rule of thumb a lease extension can cost approximately 10% of the property’s value. If you leave it until it is under 60 years left to run, which is called a short lease, then it can cost even more.
Lease length is also important if you want to re-mortgage a leasehold property or sell it – both are difficult and expensive if there are fewer than 70 years left to go.
Leaseholders must sometimes also pay their Freeholder a portion of the extra value created by extending the lease, which is known as marriage value.
Applying for a lease extension is specialised conveyancing work and you may need separate advice concerning this. There will be conveyancing costs to pay for the lease extension, on top of the payment for the extension itself.
Leasehold houses (new builds)
Over the years, many new build houses have been sold as leasehold properties rather than freehold ones. Often the people buying the houses did not realise this because they did not know to ask the right questions, only to find out afterwards they did not own their homes in the way they had expected.
They have also faced unfair additional ground rent and services charges, and the changes they could make to their homes have been either restricted or expensive to get permission for.
Some new build developers exploited ground rent to make money – known as ‘the leasehold scandal’. After building and selling leasehold properties, they have in the past inserted clauses into the leases that enabled the ground rent to be increased every year far beyond the usual annual £50-£100. This has left some Leaseholders with bills of several thousands of pounds a year.
The building society or bank will arrange for a surveyor to value the property. The report will not be detailed and is designed to protect the building society or bank – not you. It is therefore recommended that you arrange for your own survey to be carried out.
If the valuation reveals that the property is not quite up to scratch, the building society or bank may make it a condition of their offer that you have the listed work dealt with. They may even retain some of the mortgage money until you have done so. In these cases you should obtain estimates as quickly as possible so that before you exchange contracts and commit yourself to the purchase, you know exactly how much it will all cost at the end of the day. Remember that before contracts are exchanged you are not committed to proceeding, and can therefore possibly agree with the seller a reduction in price to cover the cost of the necessary repairs.
There are many reasons why a person might consider transferring their house to another person, often to family. You might do it in order to make the process after your death more straightforward, or you might do it for tax planning purposes. There could be several potential consequences. You need to consider these before you make a decision.
You will no longer be the owner of the property:
Tax implications:
There has recently been a lot of dissatisfaction with how leasehold law operates. As a result of pressure from various sectors, there was an Act passed called the Leasehold Reform (Ground Rent) Act 2022. This prevented new leases for a long term from charging any rent at all. Services charges are unaffected. Unfortunately, it didn’t apply to rent charged under existing leases.
In a few years there will grow to be two sorts of leasehold property – old style ones with rent and new ones where no rent is charged. It is possible that having an old-style lease will affect marketability – for example there might be a risk that the old-style leases may be more unattractive to buyer.
There is a further “legal technicality” which arises out of the level of the rent on a lease. There is a legal loophole which says that leases, even long ones, which charge more than a rent of £250 per year, could be construed by the courts as assured shorthold tenancies. These types of tenancies are usually designed for short-term lets (e.g. tenancies for 6 months) and are the most favourable type of tenancy from a landlord’s point of view. The ramifications of this is that if the rent falls into arrears (for more than 3 months), and the landlord seeks repossession of the lease, the court must grant repossession (i.e. the courts do not have any discretion as they would with a lease for a lower rent) and the tenant (you) could lose the lease altogether. I should add that this loophole is something which has caused a bit of a fuss with conveyancing solicitors’ groups, although there is no evidence that landlords are currently exploiting this loophole.
As a result of the loophole explained above, the Solicitors Regulation Authority has said that as well as making clients aware of these issues, conveyancers, with client’s authority, should consider an approach to landlords to see if they will agree to reduce the rent (altogether to zero or under £250). There is of course no guarantee the landlord will agree.
These rules mean a buyer would need to decide whether to approach the landlord to see if they will amend the lease, or to proceed with the lease as it stands. If you do just want to go ahead without approaching the landlord, you will of course understand the importance of keeping the rent payments up to date. I would strongly recommend these are paid by direct debit for example.
When selling a property at auction:
When buying a property at auction:
For a standard Freehold property, we would anticipate exchange to take place 8-10 weeks upon receipt of draft contract documentation. If the matter is Leasehold, Shared Ownership or complex, we would anticipate a further 3-5 weeks being added to this timescale.
If there is a chain, all parties in the chain have to be ready before exchange can take place. It is unusual for transactions to all be ready at the same time, so there may be further delays whilst the chain ‘catches up’. We will of course keep you updated as to the position. Once everyone in the chain is ready, exchange can take place whereby a completion date is set.
A chain is created when you buy and sell simultaneously. The length of the chain depends on how many transactions there are. For example, if you were a selling and buying, there would potentially be another transaction below you (for your buyers) and above you (for the sellers).
As each transaction is dependant on another, this can affect the speed of progress as the speed will be dictated by the slowest party in the chain. Before exchange can take place, all parties in the chain must be ready
Searches help to identify any issues with a property. If you are obtaining a mortgage, some searches are required as part of your lender’s requirements (usually the Local and Drainage Searches). If you are a cash buyer searches are optional (but recommended).
Local Searches
These establish whether the property is a listed building, in need of a renovation order, located in a conservation area, etc. Local authority searches also cover planning permissions and building regulations approval. In addition, they will look at any proposals that could affect the property such as new roads etc.
Drainage Searches
A drainage search determines whether the property is connected to the mains drains and sewers. It also establishes if there is a public sewer within the boundary of the property. If there is, your conveyancer will need to investigate this further to determine whether the right agreements are in place.
Environmental Searches
An environmental search determines whether the property has been constructed on or within proximity to contaminated land. It would also identify any flooding, radon gas levels, and whether the property is located in a coal mining area. Depending on where you live and the results of the above searches, it is not uncommon for your conveyancer to request additional searches.
Plan Search
This provides details of planning applications made within the vacinity of the property. This will enable you to see what planned development is upcoming in the area, and if any planned applications will affect your decision to purchase the property. For example, will the neighbouring property building a large extension affect your use or enjoyment of the property?
If someone is giving you money, or you are getting a private loan to help purchase a property, we are required to undertake legal and anti-money laundering checks against the person giving you the money. These checks include proof of ID and proof of funds in the form of a bank statement(s). Also, your mortgage lender may require that we report to deposit to them and obtain an Insolvency Act Indemnity Policy to protect their interest in the property. While this can be time-consuming, we must report a gifted deposit to your mortgage lender and obtain their approval to the gift before exchange of contracts.
A mortgage valuation is a report undertaken on behalf of your lender. It does not investigate any possible structural defects of the property.
Among other things, a RICS HomeBuyers Report (HBR) would cover:
Recommended for purchasers of older and larger properties, a building survey would cover (but is not limited to):
Your property is probably the most valuable thing you will ever own. But did you know fraudsters can try to steal it from under you even while you are still living in it?
If you already own a property, or are thinking of buying one, it is important to be aware of these fraud risks. Simple precautions can protect you.
Who is vulnerable?
While all homeowners and properties are at risk, some are more vulnerable than others.
Particularly owners who are:
Particularly properties which are:
Property Title Fraud
This is when a fraudster changes the registered details of your property to create the appearance that they own your house or land. To do this they will often pretend to be you or someone else normally involved in a property purchase or sale – perhaps a potential buyer or seller, a mortgage lender or a conveyancer.
Unregistered Titles
If your home is not registered with HM Land Registry, your risk is greater. A fraudster could forge some paper deeds, use them to register your property in their name, apply for a mortgage or make a sale to an unwitting buyer – and then disappear with the cash.
If you own an unregistered property, think seriously about voluntarily registering it with HM Land Registry. This gives you valuable legal protection when it comes to property title fraud.
Registered Titles
This is when a fraudster impersonates the true owner and tries to transfer the registration of the property into their own name in order to sell it or acquire a mortgage. After a fraudulent transaction of this kind the true owner’s registration can normally be restored. But the stress and inconvenience is far better avoided by staying vigilant.
Register your property with HM Land Registry
If your property is unregistered, you should consider applying for voluntary registration. This is an easy and effective way to protect yourself and your home. It creates an official record that can be checked by anyone who needs to confirm your ownership.
Registration also makes your title more secure and provides extra legal protections. For example, if you do suffer a loss from this kind of fraud you might be entitled to compensation from HM Land Registry.
Keep your registered details up to date
Make sure that HM Land Registry always has your correct name and address. They may need to send you official letters or notices which can act as an early sign of fraud. It’s simple to update your details, so make any changes immediately.
HM Land Registry will alert you to any unusual activity relating to your property registration.
Keep a close eye on your register entries
This is easier than you might think. Simply sign up to HM Land Registry’s free property alert service. If someone tries to change the register for your property you will be notified immediately.
You can use the service to monitor up to 10 properties. Changes to the register wont be blocked automatically, but you will be told about them so you can take action.
Restrict your property title
If you or your property are at particular risk of fraudulent transfers, mortgage applications or register tampering, you might also want to consider applying for a restriction to be placed on your title. In the event of an attempted sale, a title restriction requires the conveyancer to formally certify that it really is the legitimate owner who is making the sale.
Exchange of contracts is when the contract becomes formally binding and a completion date is set. On exchange, a deposit (usually 10% of the price) is handed over to secure the contract. If parties were to withdraw after this date, the deposit would be forfeited.
Completion is the date the vendors vacate the property and the new owners physically gain access to the property.
On exchange, you become legally committed to the transaction. By the time contracts are exchanged, therefore, you must be satisfied with every aspect of the property, including its size and condition, its fittings and the terms of the purchase, and must be ready to commit yourself. This will involve you looking over the property carefully, and in obtaining survey reports in respect of the property and if necessary on some of the fixtures and fittings as well (e.g. the boiler). The seller is under no obligation to point out defects to you and will not be giving you any guarantees.
Please note that the property is sold in its condition as at the time of exchange of contracts and you should arrange an inspection immediately prior to exchange in order to ascertain the condition. This point is particularly important if you are purchasing a property which has been lying empty since you last inspected it. In particular, repairs and replacements to boilers can be expensive. Our advice is to have the seller physically demonstrate to you that the boiler is working properly.
If the seller has given incorrect information, you may be able to make a claim for misrepresentation however, this is difficult, time consuming, with no guarantee of success, and you would need to budget for legal fees.
You will need to ensure that you have adequate buildings insurance in place from exchange of contracts. This is because there is no liability on the sellers to keep the property insured from exchange, and on exchange you have entered into a binding contract to purchase the property.
Usually, no, but if a firm of solicitors have two or more offices it is possible for different offices to act for a buyer and seller. Chamberlins have 4 offices; Great Yarmouth, Caister, Lowestoft and Beccles so are able to act on both sides of the transaction.
