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Important things to know before buying leasehold property

Date: (4 February 2013)    |    

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Ownership of leasehold property is fixed for a period of time and if anyone owns a leasehold property they have a legal agreement known as ‘lease’ with the landlord who is also at times known as the ‘freeholder’. The agreement carries the clause of the duration of ownership of the property.
The ownership of the property returns to the landlord when the lease comes to an end. Most flats are leasehold. Houses can also be leasehold and usually come under it when they are bought through a shared ownership scheme.
Before you plan to buy leasehold flat, be sure about your rights which include asking for a summary showing how the service charge is planned out and what it is spent on, you are also entitled to see receipts and paperwork and not furnishing this details the landlord would attract criminal liability.
Though there is no statutory definition of service charge the law states that it must be ‘reasonable’ and any discrepancies could be challenged at a leasehold valuation tribunal which the decision is making body.
There may be a fund created for unexpected maintenance or repairs which a leasehold buyer may have to pay into whilst the leaseholder would have the right to be consulted about charges for running or maintaining the building if the leaseholder has to pay more than £250 for planned work.
Though there are thousands of flat owners who pay large sums to managing agents to cover charges the large numbers of leasehold flat owners can legally establish a Right to Manage (RTM) company.
By doing so the leaseholders could actually keep the responsibility of organising repairs, gardening and maintenance excluding collection of rents from the landlord or the management company.
To set up a RTM company several criteria have to be met which include having at least half the total number of flats required to join the RTM company.
Several law firms specialise into this. Firms with a team of good conveyancing lawyers would provide all the information and help before and after buying leasehold properties including setting up of an RTM.