Purchase of a Leasehold Residential Property

At Freeman Box we recognise that every client has individual needs and each transaction will be different. Our fees will be tailored to the transaction at hand and discussed with you during our initial consultation. During the course of the transaction, should anything arise resulting in an increase in our fees, you will be informed immediately.

In this article, we set out a guide to the costs and expenses you can expect to incur in a typical leasehold purchase transaction. Please contact us to discuss your personal requirements and to receive an accurate estimate.

Fees

Our fees* cover all of the work required to complete the purchase of your new home, including dealing with registration at the Land Registry and dealing with the payment of Stamp Duty Land Tax (Stamp Duty) if the property is in England, or Land Transaction Tax (Land Tax) if the property you wish to buy is in Wales.

 Disbursements

Disbursements are costs related to your matter that are payable to third parties, such as Land Registry fees. We handle the payment of the disbursements on your behalf to ensure a smoother process.

 Anticipated Disbursements

The disbursements which we anticipate may apply are set out separately below. This list is not exhaustive and other disbursements may apply depending on the terms of the lease. These fees vary from property to property and can on occasion be significantly more than the ranges given below. We will update you on the specific fees upon receipt and review of the lease from the seller's solicitors. 

• Notice of Transfer fee – This fee, if chargeable, is set out in the lease. Often the fee is between £50-£100 plus VAT.

• Notice of Charge fee (if the property is to be mortgaged) – This fee is set out in the lease. Often the fee is between £50-£100 plus VAT.

• Deed of Covenant fee – This fee is provided by the management company for the property and can be difficult to estimate. Often it is between £75-£250 plus VAT.

• Certificate of Compliance fee - To be confirmed upon receipt of the lease, as can range between £50-£250 plus VAT.

You should also be aware that ground rent and service charge are likely to apply throughout your ownership of the property. We will confirm the ground rent and the anticipated service charge as soon as this we receive this information.

 Stamp Duty Land Tax

This depends on the purchase price of your property. You can calculate the amount you will need to pay by using HMRC's website or if the property is located in Wales by using the Welsh Revenue Authority's website.

 How long will my purchase take?

Normally, the time between receiving papers and exchange is four weeks, as is the time between exchange and completion. However, these times can be varied to suit the requirements of the parties to the transaction. These times may also vary if complications arise, such as (but not limited to) a defect in title which requires remedying prior to completion or the preparation of additional documents ancillary to the main transaction, or if the landlord’s consent is required.

If you are buying a leasehold property that requires an extension of the lease, this can take significantly longer, between 4 and 6 months. In such, a situation additional charges would apply.

We will keep you informed of any complications arising which could delay the purchase process and of any resulting increase in costs.

 Stages of the process 

The precise stages involved in the purchase of a residential leasehold property vary according to the circumstances. However, below we have set out some key stages as a guide: 

• Take your instructions and give you initial advice

• Request from you money on account to cover initial searches

• Check finances are in place to fund purchase and contact lender's solicitors if needed

• Receive and advise on contract documents

• Carry out searches

• Obtain further planning documentation if required

• Make any necessary enquiries of the seller's solicitors

• Make any necessary enquiries of the freeholder/managing agents

• Give you advice on all documents and information received, including a full report on the terms of the lease

• Go through the conditions of the mortgage offer

• Send final contract to you for signature

• Draft the Transfer document

• Advise you on joint ownership (when applicable)

• Obtain pre-completion searches

• Agree completion date (date from which you own the property)

• Request deposit monies from you (usually 10% of the purchase price)

• Exchange contracts and notify you that this has happened

• Arrange for all monies needed to be received from lender and you

• Complete purchase

• Deal with payment of Stamp Duty/Land Tax

• Deal with application for registration at Land Registry

* The fees mentioned in this article are for guidance purposes only and assume that:

1. this is a standard transaction and that no unforeseen matters arise including for example (but not limited to) a defect in title which requires remedying prior to completion or the preparation of additional documents ancillary to the main transaction, or if the landlord’s consent is required;

2. this is the assignment of an existing lease and is not the grant of a new lease;

3. the transaction is concluded in a timely manner and no unforeseen complications arise;

4. all parties to the transaction are co-operative and there is no unreasonable delay from third parties providing documentation;

5. no indemnity policies are required. Additional disbursements may apply if indemnity policies are required.