What’s the news?
From the end of May 2022 estate agents and other property businesses must include length of lease, amount of service charge and ground rent and whether the property is in a shared ownership scheme when marketing properties. This information is absolutely essential to buyers finding out from the start whether a property is worth pursuing or not (e.g. is the lease so short they won’t be able to get a mortgage). Property solicitor Martin Whitehorn explains the new rules…
New rules on marketing properties
The National Trading Standards Estate and Letting Agency Team has announced what information it considers so material to a purchase or letting, that by the end of May 2022 this information must be stated up front when properties are marketed. If that information is left unfilled on portal websites advertising properties, then the absent details will be flagged and a link provided to advice on why that information is important and how it can be acquired.
What does this information include?
Perhaps most significant is that details of tenure (how you own a property) must be disclosed. This includes:
leasehold – where you own a property for a defined number of years via a lease;
freehold – where you own a property outright without a specified limit on the number of years you can own it; and
commonhold – where freehold property is split into different units with obligations and rights granted to each unit owner and a commonhold association established to manage the units in a manner similar to leasehold property, but with no specified limit on the length of your ownership.
Is it just that?
For commonhold properties, details of the unit holders’ obligations and rights between each other and the commonhold association should also be disclosed. Leasehold property owners, on the other hand, are not required to divulge details of the rights and obligations between leaseholders and their landlord and/or managing agent, but I will be interested to see whether this changes.
However, what will have to be disclosed when selling a leasehold property are the current ground rent and service charge together with their respective review periods, along with the length of the lease and whether it is a shared ownership leasehold property. It is gratifying to see this as one of the first things we look at when helping clients buy a leasehold property is precisely this information, as some of these details can affect whether a mortgage lender will lend on the property.
Isn’t all that obvious when trying to buy a leasehold property?
This information is significant as the ’leasehold scandal’ has highlighted that many have moved into leasehold homes without having been adequately advised on the implications of owning a leasehold property. Short leases, rapidly increasing ground rents and service charges are recurring issues affecting leasehold owners’ enjoyment of and ability to sell their properties.
Anything else?
Additionally, in England, Wales and Scotland, the council tax band should also be disclosed, whereas in Northern Ireland it is the rates payable. Properties for sale should have their price given as a single figure, while properties to let should have the deposit payable – if any – and the monthly rent disclosed.
Julie West Solicitors is able to assist with residential and commercial property work including:
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Property solicitor Martin Whitehorn