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If you own a Wimbledon flat or apartment, chances are it is a leasehold property. Even if you have a good number of years left on your lease, it is worth understanding the process for extending your lease – known as leasehold enfranchisement. We look at when you might need to think about extending the lease on your flat, how you might go about it and a few other things you need to know besides.
There are two main types of homeownership in England; freehold and leasehold. Whether a home is on the market as freehold or leasehold is one of the first questions you should ask when viewing the property. Most London flats are sold as leasehold, but leasehold houses are sometimes on sale too.
When you buy the freehold, you are buying the property and the land on which it is built. Buying leasehold gives the purchaser the right to occupy the property for the number of years specified in the lease – ‘the term’.
A key thing you need to check before viewing a property is the lease length – as lease terms can vary dramatically.
A flat’s original lease is likely to be for a long period, which far exceeds the number of years its first owner would live there. As properties get older, and pass between owners, the length of time remaining on a lease is reduced.
Ownership of a leasehold home will revert to the freeholder once the lease runs out so as the number of years left reduces, so does the value of the Leasehold property. Furthermore, as the term of the lease gets shorter, the premium payable for the extension of the lease increases. Most mortgage lenders will require a lease term to be as long as the mortgage term plus a further 50 to 75 years, so anyone buying a flat with a lease of fewer than 80 years remaining may find it harder to obtain a mortgage.
However, under the 1993 Leasehold Reform, Housing and Urban Development Act, flat owners are entitled to a 90-year extension to their lease for a fair market price, as long as they have owned the property for at least two years. This means that you will pay a premium to obtain an additional 90 years to the existing term and the ground rent will be reduced to a peppercorn. If your lease has less than 90 years left to run, you really should think about extending it, not only in case you need to sell or re-mortgage but also because a lease term above 80 years does not attract marriage value. This is the increase in the value of the flat attributable to the fact the lease has been extended. This has to be shared equally between the parties.
You should start by appointing a solicitor with experience of leasehold enfranchisement as well as a professional surveyor, who will give you a valuation for the cost of the lease extension (the premium).
You or your solicitor should then serve the freeholder with a Section 42 notice, Under the 1993 Leasehold Reform, Housing and Urban Development Act, which informs the freeholder of your wish to be granted a lease extension and the amount you propose for the premium. You will need to specify when your landlord should respond to you with a counter-notice – this must be no less than two months from the date you served the original notice.
You may be asked to pay a deposit of £250, or 10% of the premium set out in the Section 42 notice if it is more. The landlord has a right to access your property to conduct their own valuation.
You will be liable to pay your own and your landlord’s legal and valuation fees.
The landlord must respond to you with a counter-notice, stating whether they accept your terms. You will then enter negotiations until terms are agreed by you both.
It isn’t necessary to take this legal route if you can negotiate terms with your landlord informally. However, it is still advisable to have an independent valuation and legal advice before agreeing to anything – to make sure you are receiving the most favourable terms possible.
How long the process takes depends on lots of factors, including the speed of communication between you, your solicitor and your freeholder and the surveyors appointed by both parties but it can take a number of months.
Disputes between the landlord and leaseholder can be referred to an independent body known as the First-Tier Tribunal.
Depending on the amount of time left on your current lease, leasehold enfranchisement can definitely be worth it. If you allow the length of time on your lease to drop below 80 years, the process becomes much more expensive because of the requirement to pay marriage value and the property may become hard to sell, if you need to, because of the difficulty of a buyer obtaining a mortgage on it.
If you live in a leasehold property, an alternative to extending a lease is to get together with your fellow leaseholders and buy the freehold. This is known as collective enfranchisement.
You will need to get at least 50% of leaseholders in your block to agree to participate for the collective enfranchisement to go ahead.
If you would like further information or advice about enfranchisement Andrew Scott Robertson have a specialist surveyor who is an expert in these matters and will be pleased to talk about the issues and advise you on your personal circumstances. Please contact us.
If you are looking to buy or sell property in Wimbledon, whether freehold or leasehold, Andrew Scott Robertson are local estate agents. We would be happy to discuss your requirements and show you our selection of properties. Please contact us today.
January saw house prices across the UK up by 1.9% on the same time last year and up 1.4% on December, according to figures from the Nationwide Building Society.
The Nationwide, one of the UK’s leading lenders, said prices reached a 14-month high as the so-called ‘Boris bounce’ brought post-election confidence to the housing market.
In its report, the building society points to other signs of revival, including the highest increase in the number of mortgages approved by Britain’s high street banks in five years.
According to Robert Gardner, Nationwide’s chief economist: “Healthy labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook. January’s pickup comes after a whole year of annual house price gains below 1%.”
Meanwhile data from property portal Zoopla shows that annual house price growth in the UK’s 20 biggest cities has hit a two-year high, thanks to a surge in demand for properties. London saw 1.9% growth, the fastest since 2017.
Among the economists forecasting growth in house prices this year is Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, who said: “Indicators of demand at the very start of the homebuying process are red-hot.
“We think the pickup in demand can be sustained this year by the continuation of low mortgage rates and solid wage growth, driving prices up by about 4%.”
The discrepancy in house prices between London and elsewhere has narrowed by 20% since the Brexit vote, according to research published by the Resolution Foundation.
Read more about this story in The Guardian.
If you have just had an offer accepted on your dream home, you might be breathing a sigh of relief. But don’t relax too much – there are a few more legal hurdles before the place is truly yours.
Anyone new to buying property might be confused by the process. So, if you’ve been wondering about the difference between exchange and completion, we explain what happens when you buy a home and what you need to do to keep things ticking along.
Put simply, exchange and completion are the two big stages in the house buying process.
Exchange of contracts is the point at which the buyer and seller’s solicitors or conveyancers do just that – exchange the signed contracts they have drawn up for they clients.
The buyer will also pay a deposit to the seller – usually 10% of the purchase price. At this point, the sale becomes legally binding and neither party can pull out without serious penalties. The solicitors will also agree a completion date.
Completion is the final point in the process, when legal ownership of the property is transferred to the buyer, the balance of the sale price is paid, they keys are handed over and the place is legally yours.
If you are buying property, the first thing you need to do after your offer is accepted is to appoint a solicitor or conveyancer, to act for you in the sale. They will get to work on the necessary property searches and paperwork to prepare for the sale.
It might feel like not much is happening at this stage. You can help speed things up by being proactive and communicative – the quicker you are at responding to queries, the faster the sale might go through.
The key things you need to do to get to the point of exchange are:
• Commission a professional survey of the property you are buying.
• Get a written mortgage offer.
• Check the terms of the contract, the lease (if a leasehold property), the results of the searches and any other relevant documents carefully and ask your solicitor about anything you are not sure of.
• Sign the contract and any other documentation and return it to your solicitor immediately.
Put your solicitor in funds for the deposit that has to be paid.
Once all the paperwork is complete, the buyer and seller will sign identical contract documents and the exchange will take place. This will usually happen over the phone with both solicitors dating the signed contracts then mailing them to one another. If you are in a chain, each party in the chain will exchange at the same time. At this point the sale becomes legally binding and the exchange deposit is paid.
A completion date will also be set – usually this will be two to four weeks from exchange, although it is possible to complete on the same day, or much later. If there is no chain, you will have more flexibility around a completion date.
When exchange has happened, you are committed to buying the property. Should you wish to pull out now, for any reason, you are likely to lose your deposit and may be liable for other costs incurred by the seller – they may also sue you.
Once you have exchanged contracts, you should begin finalising your house move, confirming with the removal company and getting on with your packing. You should also contact the relevant companies to arrange to take over the utilities.
Once lawyers on both sides have completed their final checks, your solicitor will request any mortgage advance from your lender and transfer the balance of the purchase price into the seller’s solicitor’s bank account in return for the signed deed transferring the property to you. You will receive a phone call when the sale has completed and can collect the keys to your new home from the estate agent.
More than half of sales in England complete on a Friday – popular because it gives buyers the weekend to get the house organised and unpack. However, choosing a mid-week day can be beneficial if there is a delay for any reason – lenders will be open to sort out any issues, avoiding the risk of your being homeless over the weekend!
What happens next?
It is likely that you will owe stamp duty on the property. This is usually paid by your solicitor on your behalf, having collected the amount due from you in advance. Your ownership of the property is then registered by your solicitor at the land Registry.
If you are selling, It is worth organising all the paperwork for your sale as soon as you decide to move, including mortgage information, correspondence with solicitors, energy performance certificate guarantees and if applicable, service charge accounts, so it is easily found if needed.
If you are thinking of buying or selling property in the Wimbledon area, we’d be happy to help you through the steps you will need to take, and show you our current selection of properties. Contact us to find out more today.
Making homes more energy efficient is vital if the UK is to meet its commitment to cutting carbon emissions and helping to halt climate change. For landlords, ensuring properties are well insulated and installed with energy saving measures is important too – to give tenants a warm and comfortable home with reasonable energy bills.
This year, however, energy efficiency is about more than good practice – it is a legal necessity. The government’s domestic Minimum Energy Efficiency Standard (MEES) regulations enforce energy efficiency in the rental sector. The regulations apply to all domestic privately rented properties with assured shorthold tenancies.
Under the regulations, since April 2018 all new tenancies must achieve an Energy Performance Certificate (EPC) rating of at least E. An EPC rates how energy efficient a property is on a scale of A to G, with A being highest. Any property, which has been sold, let or modified since 2008 is legally required to have an EPC.
As well as giving the property an energy efficiency rating, the EPC also sets out measures you can take to improve your score. You need to have an EPC inspection carried out every 10 years.
Under the law, landlords are not allowed to grant a new tenancy for any property rated F or G – they must take steps to improve its energy efficiency first. From April this year, all existing tenancies must also achieve an energy rating of E or greater.
In other words,
If your property is currently rated F or G, and you have made energy efficient improvements since your last EPC assessment was carried out – if you have had a new boiler or double glazing fitted for example – it is advisable to get a new EPC certificate, as you may not be affected by the MEES regulations.
The government has introduced a cost cap on energy efficient improvements, meaning you should never need to spend more than £3,500 (including VAT). There are three funding options open to you:
If you cannot improve your property to EPC E for £3,500, you should make all the improvements you can up to that amount, then register for an ‘all improvements made’ exemption. Find out more about this on the government website.
There are various other exemptions, which you may be eligible for too – for example a wall insulation exemption can be used if fitting this type of energy efficiency measure would have a detrimental effect on your property.
Most exemptions last for five years, after which you will need to try again to bring your property up to standard or register for another exemption.
If the improvements will cost you more than £3,500, and you can afford to make them, it may be advisable to go ahead regardless of whether you could have obtained an exemption. Regulations are likely to become increasingly stringent over time and it may cost you more to complete the improvements later.
The government has committed to improving energy performance standards of privately rented homes in England and Wales, with the aim of seeing as many as possible being upgraded to a B or C rating by 2030.
Energy efficiency improvements could have numerous other benefits for your property, from avoiding problems with damp, to attracting tenants and making it easier to sell if you wish to.
Examples of energy efficient measures that will improve your property’s rating include installing floor insulation, switching to low energy lighting, adding double glazing, increasing loft insulation and changing to a modern heating system. Adding renewable energy sources such as solar panels or ground source heating can really boost an EPC score too.
If you are a landlord with property in Wimbledon, we would be happy to advise you about the many aspects of letting homes. Please contact us today to find out more.
As Britain enters the final week before the general election polls open on 12 December, competition for every seat if fierce.
In Labour’s general election manifesto, Jeremy Corbyn promises to ‘transform’ the UK with an ambitious set of pledges. For the Conservatives, underlying every policy announcement is Boris Johnson’s promise to ‘get Brexit done.’ And Jo Swinson’s Liberal Democrats want to ‘stop Brexit’ and ‘build a brighter future.’
But what do the three main parties say about housing? From reforms for renters to housebuilding and energy efficiency, we break down some manifesto pledges that concern the property sector.
The Conservatives say they will build at least a million more homes over the next parliament in an effort to reach their existing, 300,000 homes a year, target by the mid-2020s.
The Liberal Democrats also make pledges around this figure – they will build 300,000 homes per year by 2024, including 100,000 social housing units.
Labour announced a £75 billion programme to build 150,000 council or housing association homes a year, with 50,000 being ‘genuinely affordable’ based on local incomes.
The Conservatives will follow through on their pledge to end Section 21 no-fault evictions. The party also wants to introduce ‘lifetime deposits’, where tenants transfer their deposit from one property to another.
The Liberal Democrats want mandatory licensing of landlords and longer tenancies, of 3+ years. They would also introduce a Help to Rent scheme, providing government-backed tenancy deposit loans for first-time renters under 30.
Labour would introduce rent controls, capped by inflation and end no-fault evictions by creating open-ended tenancies.
Labour wants to reform the Help to Buy scheme, increasing its focus on first-time buyers on ordinary incomes. The Conservatives will introduce ‘lifetime’ fixed-rate mortgages, with a 5% deposit.
There are no proposed changes to stamp duty for ordinary buyers. But all three manifestos address non-UK residents buying homes in the UK. Boris Johnson has pledged a stamp duty surcharge of 3% and Labour would add a 20% surcharge for foreign companies buying here.
The Liberal Democrats would launch a programme to insulate all of Britain’s homes by 2030, cutting both emissions and fuel bills.
Labour has announced a ‘new green deal’, creating one million jobs to tackle climate change. Among its pledges is a promise to upgrade 27 million homes to the highest energy-efficiency standard.
The Conservatives say that homes will be made more energy efficient, with £9.2 billion to be spent on insulation, and similar measures for schools and hospitals.
Read a quick guide to each party’s pledges in the Guardian.
Increasingly, bats are choosing to roost in residential properties – old and new – as the number of traditional woodland habitats has fallen. As creatures of habit, they will often return to the same spot time and again.
Wimbledon Common is home to several bat species. While living nearby means that nature really is on your doorstep, if you find the bats have moved closer to your home than you might like, what should you do?
Firstly, it is important to remember that it is rare for bats to cause damage to a home. You may not even notice they are there, especially during the winter months when they are less active, seeking refuge from the weather in roofs and outbuildings while they rear their young.
The problem comes if you wish to sell or renovate your property, as bats are a protected species under UK law. Jack Parker, of Cornerstone Barristers explained: “The legal protection afforded to bats means that it is not only a criminal offence to kill a bat, you also commit an offence if you ‘disturb’ a bat [for example, by interfering with its habitat] or if you damage or destroy a bat’s roost [where they rest and breed].”
If you are selling a property with bats, you must inform your potential buyers. Withholding this information could lead to a claim for compensation later on – if the buyers are unable to renovate the property as they would have liked, for example.
The other issue comes if you wish to carry out building work, as celebrities including musician Noel Gallagher and radio presenter Kelly Brook have recently found.
Having bats doesn’t necessarily mean your renovation plans will be permanently scuppered. Kelly Brook applied to build two bat boxes in the chimney of her Kent home, following an ecology survey, which found long-eared and pipistrelle bats living in the roof.
According to Jack Parker: “Various measures can be used to avoid any impact on bats, such as carrying out work at certain times of year when bats aren’t present; by incorporating bat roosts into the development in question, or by making sure that artificial lighting is designed in a way which does not affect bats.
“Work which would disturb bats may only be carried out with a licence, which will only be granted in exceptional circumstances.”
I recently attended a conference at which Richard Snape, a nationally renowned property expert and Consultant and Professional Support Lawyer with Davitt Jones Bould Solicitors, was one of the speakers. Part of his lecture, the substance of which I share here, concerned the issues around Japanese Knotweed. The plant was imported into the UK via Swansea back in the 18th Century. Its use was to reduce landslide but it spread across the counties and over the past 100 years its growth has been quite significant.
Japanese knotweed is a notifiable substance and it is illegal to cause it to be propagated in the wild. Local authorities can take action against property owners, both under the Wildlife and Countryside Act 1981 by the issue of remediation notices and charges for its removal, and under the Anti-Social Behaviour, Crime & Policing Act 2014. That piece of legislation gives the local authority power to serve Community Protection Notices on property owners who fail to control their Knotweed.
The presence or otherwise of Japanese knotweed has, therefore become a routine enquiry raised by solicitors during property transactions, not least because it constitutes a contamination substance and infestation of land.
Richard Snape highlighted the problems around knotweed when it comes to a sale. The standard enquiry that is asked as to whether the property is affected by Japanese Knotweed allows the response of ‘Yes’, ‘No’ or ‘Don’t Know’. Richard warned: “‘No’ would be a statement of fact and potentially actionable. ‘Don’t Know’ may be a representation that attempts have been made to investigate. Moreover, the property may be affected by Japanese Knotweed if it is within the neighbourhood. It is suggested that response should be made clear that there has been no attempt to find it.”
There has been some recent litigation involving Japanes knotweed, where claimants have succeeded in recovering damages. In Williams & Waistell v Rail Infrastructure Limited, landowners were awarded damages of £10,000 for lost development potential and possible future damage to property plus £5,000 for remedial work. In Ryb v Conway Consultants damages of £50,000 were awarded against a surveyor who failed to identify the presence of Japanese knotweed in a garden – a lesson to my own profession!
Still, it’s not all bad news. Although Japanese Knotweed is not one of your ‘5 a day’ vegetables, it has been known to be used in the making of gin and apparently, the result is rather good. If you are looking for professional advice on a particular property problem, whether residential or commercial, we would be happy to have a conversation with you to see if we can help. Contact us today!
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