What is a Lease?
If you are the owner of a leasehold property (be it a flat or a house) you will not actually own the property itself but, instead, will essentially ‘own’ the right to live in or use the property for a specified period of time – the agreement which creates this arrangement and sets out its terms is known as a lease.
The lease is a legally binding contract between the lessor (typically the freeholder) and the lessee (tenant), granting the lessee exclusive possession of the property for a certain amount of time, which will be specified within the lease, in return for an initial payment (the premium), and annual rental payments (the ground rent).
The purpose of the lease is to provide certainty to all parties as to what is being leased (the demise), for how long (the term), and on what conditions. As such, a lease will most commonly contain:
· The address of the property, and a plan showing the extent of the property being leased
· Details of the term of the lease (i.e. 99 years from 1st January 2000)
· Details of the ground rent and any review provisions (i.e. £100 per annum, doubling every 33 years)
· Details of the service charge provisions – what the charge covers, how your share is calculated, and when it is due
· Details of responsibilities for insurance, maintenance, and utilities
· Any obligations or restrictions upon either the lessor or lessee (noise, pets, sub-letting, internal/external redecoration, etc.,)
The above is a non-exhaustive list and there is, with a few notable exceptions, no limit to the terms that can be contained within a lease. For example, a lease could dictate that the lessee can only occupy the property between February and November, or that only certain floor coverings may be installed within the property. At the extreme end of things, a lease could demand that a lessee pay the lessor a percentage of any rental income obtained as a result of sub-letting the property.
As you may have gathered from the above, a lease is a complex legal document and will often contain fairly complex legal language and terminology. Therefore, if you are looking to purchase a leasehold property it is vital that you have your lease read and explained to you by a suitably-qualified legal professional.
A lease can also have a significant impact on the value of your property, as a result of anything from a short lease (typically anything below 85 years), to a prohibition on holiday letting. An experienced surveyor will understand how lease terms impact the value of a property, and will be able to advise you accordingly.
For further information, please contact James at j.laughlin@watsons-property.co.uk.
To discuss extending your lease, please contact our Customer Services Team at 01603 751577 or email: survey@watsons-property.co.uk
