Commencement Date in Lease 2 years before Completion Date

London54

Hi,


I am buying a leasehold apartment at the moment which is due to complete in November 2018. The commencement date for the lease on the contract is March 2017.


When I questioned my solicitor on this she mentioned that this is how it is for all tenants buying there. I'm a bit confused why the commencement date is long before I buy the property. Is this standard practice?


It would mean that the next ground rent review would be about 8 years after I move into the property.


I'm also wondering if it would be making any changes introduced after March 2017 inapplicable despite the start date of my occupancy starting in November 2018.


Thanks

nicmyles

I think you may slightly misunderstand the nature of leasehold.

When you "buy a leasehold property", you are buying the lease. Most of the time, the lease already exists - in this case, it seems it was issued in 2017.

The lease probably won't have your name on it; it will have the name of whoever it was issued to in 2017. But your ownership of the lease will be recorded at the Land Registry, as it would be if you owned the property itself (the freehold).

If the lease was issued for 100 years in 2017, and you buy it in 2018, you are buying a lease with 99 years remaining on it. If the lease specified a ground rent increase in ten years from the start of the lease, that is ten years from 2017, not ten years from whenever you bought the lease. That is normal; you are buying the rights, but also the obligations, of the person originally granted the lease.

Any changes made to the lease in the intervening period will apply to you, yes.

London54

Thanks nicmyles


The reason I was asking is that the property is not built yet. I will be the first owner of the new build property. I just thought it was a bit odd that the lease for an apartment that doesn't exist yet was starting 2 years ago.

davidmcn

London54 wrote: »

When I questioned my solicitor on this she mentioned that this is how it is for all tenants buying there. I'm a bit confused why the commencement date is long before I buy the property. Is this standard practice?

Yes - previous threads here about it.

It would mean that the next ground rent review would be about 8 years after I move into the property.

No problem as long as your pricing takes account of that (if it makes any significant difference).

I'm also wondering if it would be making any changes introduced after March 2017 inapplicable despite the start date of my occupancy starting in November 2018.

Not sure what you mean by "changes"?

bowlhead99

London54 wrote: »

The reason I was asking is that the property is not built yet. I will be the first owner of the new build property. I just thought it was a bit odd that the lease for an apartment that doesn't exist yet was starting 2 years ago.

I bought an a apartment a while ago which had been one of the later units to be finished in a large development so its original completion date was about 4 years after the date the 125-yr lease officially started. Apparently the estate agent had a previous buyer pull out of their offer after they found out there was only 107 years left on the lease when the agent had told them 111 (among other issues). The agent had assumed the lease length knowing that all the leases were 125 years and the vendor had owned it 14 years from being a new build.

So, not at all uncommon, but you do need to consider the time to the next rent review - or end of the lease - as part of your assessment of value.

nicmyles

Apologies for the irrelevant response above, but you didn't say it was a new build!

davidmcn

nicmyles wrote: »

Apologies for the irrelevant response above, but you didn't say it was a new build!

There were clues:

• referring to an anticipated completion date as far away as November
• the lease commencement date being referred to in the contract
• calling it an "apartment", which is straight out of pretentious marketing literature. As soon as it's used it becomes a "flat"