Caveat emptor - Leasehold buyers beware!

The difference between freehold and leasehold is if you own a leasehold property you do not own the building or the land it sits on, instead you have the right to occupy the property for a fixed period of time. 

Here, writes Charlotte Ribbons, Trainee Solicitor with MJP Conveyancing, are some areas savvy leasehold buyers need to make sure they are clued up on before purchasing: 

The 'term' of the lease is important. This can typically be between 99 and 999 years. Mortgage companies will usually require there to be 70 years remaining on the term before they will lend. This is an area cash buyers should not ignore because if you later come to sell the property to a buyer needing a mortgage this will matter! It can be costly and time consuming to extend the lease term; what might seem like a 'bargain' may not be in the long run. 

Ground Rent - know your figures! This is the rent payable to the Landlord or Freeholder. It can be fixed or escalating. Your solicitor should draw this to your attention. Where there is a complex escalating clause you may need to seek further advice from a surveyor. 

Service Charge - it's important not just to know what this years’ service charge is going to be but what future service charge costs are likely. The Lessor Pack should include the statements of accounts for the last three years. Does the charge keep increasing? If so, why? 

If the accounts aren't in a healthy state this should ring alarm bells. Find out more about the Management Company and how efficient they are. The best way to do this is to speak to existing tenants and see what they have to say. 

It is possible that the service charge accounts for the current year are not yet finalised. In this circumstance your competent solicitor may seek a ‘retention’ to cover this. This would mean a sum of monies from the sale proceeds are held back to pay for this cost once the amount is known. 

Survey - the importance of having a survey carried out cannot be emphasised enough. Whilst the Lessor Pack can reveal major works which are anticipated, a survey will also be a valuable tool in this regard. If major works are required, once you become the owner of the property you will be responsible for paying a proportion of the cost. What may seem like a bargain may not be quite the investment, once factoring in paying towards the cost of a new roof!

Flooding- Just because you may be occupying the third floor does not mean flooding will not affect you! If the ground floor is flooded you will not be able to access your property, structural damage may be caused and key elements such as lifts may not function. Estimates from the British Property Federation and Leasehold Knowledge Partnership show 70,000 leasehold properties are at high risk of flooding. 

This could leave you at risk to potentially huge increased premiums, particularly as it is still unknown, but considered likely, that leasehold property will be excluded from the national flood subsidy scheme.  

The key to purchasing a leasehold property is to make sure you know exactly what you are purchasing, what your obligations and what the likely costs are now and in the future! 

Disclaimer: Please note this article does not constitute as legal advice and is for reference only. 

Wind Farms: Friend or Foe to a home buyer?

Wind turbines  are on the increase and  this is of no surprise when the  UK is known to be one of the best locations for wind power in the world. 

The UK is ranked as the world's sixth largest producer of wind power, having recently overtaken France and Italy. 

Wind power delivers a growing fraction of the energy in the United Kingdom and at the beginning of January 2014, wind power in the United Kingdom consisted of 5,276 wind turbines.

The odds of encountering one of these turbines or a planing application for one to be installed are increasing.  The importance of identifying the location of a turbine and of any planning application when moving home  has now therefore become a feature of the legal due diligence involved when buying a new home. 

Your conveyancing lawyer needs to make sure the environmental search result covers wind energy and to ensure you are altered if there is a turbine in the immediate vicinity of the property you are looking to purchase. Your advisor should also recommend a planning search to see if there is any application before the council for the installation of a turbine.   This is not a standard search and therefore you should always ask your lawyer to carry one out if wind farm activity is a concern. 

Buying a property in the immediate vicinity of the property could affect the value and if you are borrowing money your lawyer will be required to report the finding to your lender.  This is because the valuation on which the loan offer could be affected. More to the point its not advisable to purchase a property which you may then have problems re-selling in the future. 

So why would a turbine in close proximity have impact on the value of the property?

Visual Impact

Some people like the sight of a turbine but many others find the turbine a ‘turn off’. 

Lighting 

If the turbine is over 200 feet in height it has to have a light attached.  This could be a static or flashing light.  It could be viewed by some as a nuisance. 

The flickering of light caused by the wings of the turbine as they turn can also create a nuisance for those living in close vicinity especially in bright and sunny weather. 

Noise

The turbine does emit a noise.  The impact of this depends on the terrain, the direction of the wind, and the wind pattern.  The noise resembles that of a refrigerator and can travel for several hundred feet.  It commonly considered that those living more than half a mile away are unlikely to be troubled by the emission of noise. 

Health 

There is no evidence that turbines are likely to have a direct affect on health. 

However a 2008 guest editorial in Environmental Health Perspectives published by the National Institute of Environmental Health Sciences, the U.S. National Institutes of Health, stated: "Even seemingly clean sources of energy can have implications on human health. Wind energy will undoubtedly create noise, which increases stress, which in turn increases the risk of cardiovascular disease and cancer.

Lawyers are not environmental experts nor are they valuers; their duty is to make the client aware of the existence of the turbine and advise a client to discuss the implications of its location and proximity with a surveyor as well as an environmental expert so as to ensure an informed decision is made before the client commits to the purchase. 

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk