Outgoing Leaseholders – How your Landlord reaps the benefit!
Is ignorance bliss?
Sellers of Leasehold Properties in Blocks can be blissfully ignorant of the expense involved in supplying information on their flat and satisfying the requirements of the purchaser’s solicitors and their mortgagees before they are in a position to exchange contracts.
In addition to the usual fees and disbursements payable to the solicitors and estate agents upon completion of the sale, it is not unusual for there to be a Management Pack fee which has to be paid “upfront” by the seller before any details of the Block can be released. This can be in the region of £320 for a Pack from the Managing Agent acting for the Landlord. Sometimes there will be a second pack required from the Management Company in respect of Maintenance charges and this can be in the region of a further £150. Turnaround for production can be about ten working days from receipt of payment.
What is a ‘Management Pack’.
Typically a Management Pack will contain details of the last 3 years ground rent and maintenance charge details and payments with a projection of the Budget for the forthcoming year. A clear ground rent and service charge receipt will be included (as long as there are no payment arrears) together with Reports relating to Safety Issues such as an Asbestos Management Plan and Fire Safety. In addition there may be a summary of Tenants’ obligations and rights and a Conveyancer’s Information Sheet.
Whilst the outgoing lessee will have completed a Property Information form (TA6) and a Leaseholders Property Information Form (TA7), the Landlord and the Management Company will similarly be requested to complete a Landlords Preliminary Enquiries Form (LPE1) and Buyers Leasehold Information Summary (LPE2) .
Where the Management Company considers its Information Pack has fully complied with its obligations set out by its regulatory body The Association of Residential Managing Agents (ARMA), it may then seek to charge a further £49 per further question received. However this will not always be the case as if, say, the insurance policy has expired before completion then the new policy will be supplied.
Some Leases relating to a Managed Development will also include a covenant in the lease to charge the outgoing leaseholder an “Exit fee”. This is usually calculated at 1% of the sale price and an undertaking will be given by the seller’s solicitor to pay this upon completion.
It’s not over…..until
Buyers of Leasehold properties with an existing lease are also usually unaware of the additional expenses involved upon completion. There will be Notice fees payable to the Landlord and the Management Company for both the Transfer and the Charge and these can be in the region of £60 per instrument.. A separate Deed of Covenant may also be required and a fee of £120 for this is not unusual.
Finally there will always be a Restriction on the Title so that the Landlord and the Management Company are informed of any change of Ownership or Mortgage and again, it can be in the region of £60 to obtain a Certificate of Compliance from the Landlord for the purchaser’s and mortgagor’s Titles to be registered with H.M. Land Registry.
For further advice on charges you can expect on a sale of a leasehold property, or any property related matters please contact Pamela Rowan on 01763 241261 or Pamela.email@example.com.