Apartment Building

Reading a Lease

When you buy a property your conveyancer will send you a copy of the lease to look at. Your conveyancer should highlight the important parts, such as the description, the ground rent and the regulations you must obey.  However all leases are full of legal jargon and I doubt if many people will get past the first page, but you really must persevere and have a good look at it.

 

A lease is a difficult document to follow but it helps if you divide it into different sections. It will usually start with a preamble which need not concern you too much but somewhere in this section it will usually state the amount of ground rent and the length of the lease.  You must check to ensure that these figures agree with any statements made by the seller or agent. Occasionally they may be stated in a separate schedule at the end of the lease.

​The terms lessor, landlord and freeholder mean the same unless there is a head lease or underlease.  The lease will always ensure that any money paid by the lessor can be recovered from the lessees. There may be two leases, one for the estate (the head lease) and one for the flat itself (the underlease). A lease can be granted for any term, but usually 99 or 125 years, occasionally 999 years.  Many leases were granted in the 1960’s and 1970’s and even if the lease has previously been extended there may only be 60 or 70 years left to go.  It must be emphasised that at the end of the term the property will revert to the freeholder with no compensation, so as time goes by the property becomes a wasting asset, i.e. it will go down in value eventually being worth nothing. It is therefore important that the lease is extended in good time. The current thinking is that it should not get to less than 80 years, when it can become expensive to extend it.

This is an example of a paragraph from a lease which at first site is unintelligible:

"The right for the Tenant and all persons authorised by him (in common with all
others enjoying the like right) at all times and for all purposes incidental to the
occupation and enjoyment of the Demised Premises to use on foot only (except in the case of drives or forecourts adapted for vehicular use) the common entrance hall staircases passages and lifts (if any) in the Building giving access to the Demised Premises and with or without vehicles any of the common external paths driveways staircases or forecourts of the Building leading from the public highway or footpath to the main entrance or entrances of the Building PROVIDED ALWAYS that the Landlord shall have the right in the interests of good estate management temporarily to close or divert such parts of the Building specified above provided that such closure or diversion shall not prevent the Tenant from having access to or egress from the Demised Premises at all times."

As you can see it is one long sentence with no punctuation at all, and by the time you get to the end you have forgotten what was at the beginning!  However all is not lost. You need to break it down to it's constituent parts.  

Start by highlighting the basic parts as follows:

"The right for the Tenant and all persons authorised by him (in common with all
others enjoying the like right) at all times and for all purposes incidental to the
occupation and enjoyment of the Demised Premises to use on foot only (except in the case of drives or forecourts adapted for vehicular use) the common entrance hall staircases passages and lifts (if any) in the Building giving access to the Demised Premises and with or without vehicles any of the common external paths driveways staircases or forecourts of the Building leading from the public highway or footpath to the main entrance or entrances of the Building PROVIDED ALWAYS that the Landlord shall have the right in the interests of good estate management temporarily to close or divert such parts of the Building specified above provided that such closure or diversion shall not prevent the Tenant from having access to or egress from the Demised Premises at all times."

You can now read the highlighted text and make sense of the paragraph and then add in the other phrases one at a time.

It's hard work and shouldn't be necessary but until recently, leases have always been written in this way.  Modern leases are much better but unfortunately some jargon is still thought to be necessary.

The lease will be divided into clauses or schedules as follows:

1.    Rights that the lessee has, usually as follows:

a)    a right of way to the flat over the freeholders land.

b)  a right of access to the other flats or the common

parts to carry out repairs or maintenance.

c)    a right of support, protection and shelter; this requires

the other flat owner(s) to maintain their flats so that the 

structure of the building is not affected.

d)    a right for the passage of services; cables, drains etc

may pass through other flats and must not be interfered

with, and the right to access other flats if necessary to

carry out repairs.

2.     Rights that the other lessees have over your property:

           

           These will usually be the same as, or similar to, above.

3.    Covenants or restrictions:  

 

These are regulations which you must obey. These usually state that you must keep the flat in good repair, not to create excessive noise or nuisance, or block the drains.  Also possible and quite common: not to carry out any business from the flat, not to make any alterations, keep pets or sub-let without the lessor’s consent.  It can contain some onerous restrictions.  It is essential that you read these carefully as only you can decide if these regulations are likely to be a problem.  If you are buying a flat and believe that any have already been broken let your conveyancer know immediately.

There is usually another clause or schedule in the lease which itemises several covenants of a more general nature, such as the requirement to notify the lessor if any notices are received from the local authority, to pay taxes, to notify the lessor or their solicitors of any change of ownership and of any mortgages.  (If you do not pay service charges or ground rent the lessor can inform your lender that they have not been paid and ask them to pay .  If the lender agrees to pay them it will then ask you to pay it to them and add it to your mortgage debt if you do not).

 

Service charges are often referred to in more than one place in the lease.  Typically there will be lessor’s covenants which will include several clauses relating to the maintenance of the property and which parts of the building the lessor has to maintain.  Usually the lessor will have to repair the roof, foundations, the doors and windows, but sometimes these will be the responsibility of the individual leaseholders  There will usually be a section which details how the payments will be made.  Most, but not all, will prepare a budget for the forthcoming year and set out dates when payments are due.

 

The lessor usually insures the property and you will pay for this as part of the service charges.  

Modern Apartment Block