Leasehold property about to exchange - unhappy with underlease

03carrd

Hi,

We are pretty much ready to exchange on a new build leasehold property in London. Today received the contract/underlease and it appears to be very heavily weighted in favour of the landlord/freeholder, so am hoping to get an idea of whether it seems odd and what our rights are in terms of changing the terms.

The flat is in a development of a few hundred flats, all of which would have agreed to a similar lease (we are one of the very last to exchange).

Our solicitor has reviewed the contract and expressed no concern - she says the contract is obviously just their standard contract, and that even if we did want to make minor changes or tighten the wording apparently they may not be amenable, as it's preferable for them to have everyone in the development under the same terms.

In terms of the issue with the underlease, at a high level it appears to give the landlord the right to do pretty much anything, and for the leaseholders to do absolutely nothing.

Consent from the landlord is required to do pretty much anything (put a flower pot on the balcony, repaint a room, have a pet, sublet the flat) and there is nothing in the contract to stop the landlord charging for that consent. There is no ceiling defined for how much they can charge for that consent - it is "on an indemnity basis"

My questions are:
- Is this standard market practice?
- Should we seek to have these terms tightened up/removed or is that unlikely?
- Ultimately, should we be worried?

Would appreciate any advice you may have!

Norman_Castle

E.g. the leaseholders have the obligation “not to make any…addition of a non structural nature to the interior of the Property without the previous written consent of the Landlord and Head Landlord” - this doesn't even appear to make sense - this would mean we can't even buy furniture, for example, without permission?

Ask for a better definition of what is allowed and what needs permission, highly unlikely this refers to putting furniture in the property.

da_rule

03carrd wrote: »

E.g. the leaseholders have the obligation “not to make any…addition of a non structural nature to the interior of the Property without the previous written consent of the Landlord and Head Landlord” - this doesn't even appear to make sense - this would mean we can't even buy furniture, for example, without permission

This means nothing of the sort. Furniture is not an addition to the interior of the property. Furniture is (in most cases) a fitting. This restriction means that you cannot put in new internal walls, remove non-structural walls etc. Google fixture vs fitting.

03carrd wrote: »

Consent from the landlord is required to do pretty much anything (put a flower pot on the balcony, repaint a room, have a pet, sublet the flat) and there is nothing in the contract to stop the landlord charging for that consent. There is no ceiling defined for how much they can charge for that consent - it is "on an indemnity basis"

Flower pots on balconies are, joking aside, a huge headache in terms of liability. What if it falls off? Depending on which floor you're on, it could cause serious injury or damage.

I can't imagine that it stops you painting/decorating. In fact, most leases include a clause that you are to keep the flat in good decorative repair.

You could try and get them to nail down how much they can charge for consent and that it must not be unreasonably withheld.

What is it in the contract you don't like? You mention there's some things you don't like but don't specify what. Residential property contracts are standard form so very few alterations will be considered.

Also, as you are taking a sublease, some of the clauses in your lease may be required under the headlease, therefore your landlord may not be able to negotiate on them. Essentially, if your landlords landlord can do something then your landlord will need to have the same rights under your sublease so that their landlord can utilise them.

Leases will always be weighted in their wording towards the landlord. At the end of the day it's their property that they are giving you permission to live in. So essentially you live there on their terms if you want to live there. Your protection comes from the Landlord and Tenant Act 1985 which gives you recourse for unreasonable service charges etc.

bouicca21

I don't think there's much there that is outrageous, though I do find the repainting walls one to be a bit odd. My lease says I have to whitewash the walls every x years. No way I'm doing that; I'm sticking to emulsion. Upstairs are far naughtier, they have wallpapered. Who is to know?

eddddy

03carrd wrote: »

Consent from the landlord is required to do pretty much anything (put a flower pot on the balcony, repaint a room, have a pet, sublet the flat) and there is nothing in the contract to stop the landlord charging for that consent. There is no ceiling defined for how much they can charge for that consent - it is "on an indemnity basis"

The landlord will almost certainly charge for consent.

However, that would be an Administration Charge and the law says that Administration charges must be reasonable:

Commonhold and Leasehold Reform Act 2002

Reasonableness of administration charges

2A variable administration charge is payable only to the extent that the amount of the charge is reasonable.

https://www.legislation.gov.uk/ukpga/2002/15/schedule/11

The law also says that consent must not be unreasonably withheld (Landlord and Tenant Act 1927 section 19)

03carrd wrote: »

Consent from the landlord is required to do pretty much anything (put a flower pot on the balcony...

Many leaseholders see this sort of thing as a benefit - because everyone in the block has to 'follow the rules'

For example, would you want to live in a block of flats that looks a mess from the outside, because people are allowed to put anything they like (including dustbins, old fridges etc) on their balconies?

03carrd wrote: »

- Is this standard market practice?

Yes

03carrd wrote: »

- Should we seek to have these terms tightened up/removed or is that unlikely?

Typically, the freeholder (landlord) promises every leaseholder that every lease in the block/development will be the same. So yours cannot be changed in isolation.

Again, many leaseholders like this because it means everyone must follow the same rules.

03carrd

If we are able to clarify on some definitions and add some reasonability clauses in there, we would be comfortable - but it’s being suggested that we should just take it as is. There are just no limitations defined, particularly around what the landlord is allowed to charge to give consent for things such as subletting. So it’s hard to make an informed decision as to whether it’s a good idea.

The flower pots point makes sense, as does the pets, but there is all sorts of restrictive covenants - must not make any ‘avoidable noise’, must not dry clothes on the balcony, must repaint every 7 years, must allow access to the flat for pretty much anyone at any time... just wondering how standard that sounds?

If it sounds ok then great, just feels risky given what I’ve read about forfeiture etc. Wouldn’t want to forfeit ownership over not repainiting, for example. Does the Landlord and Tenant Act offer any protection from unreasonable freeholders?

eddddy

03carrd wrote: »

If we are able to clarify on some definitions and add some reasonability clauses in there, we would be comfortable - but it’s being suggested that we should just take it as is. There are just no limitations defined, particularly around what the landlord is allowed to charge to give consent for things such as subletting. So it’s hard to make an informed decision as to whether it’s a good idea.

As I say, the law already says Admin Charges must be reasonable...

... and consents must not be unreasonably withheld.

So there is no need for those clauses to be added to the lease.

And if the freeholder attempts to clarify definitions - that might put them in legal jeopardy, so I doubt they would do that.

If you want advice on what a clause means, you should ask your own solicitor.

03carrd wrote: »

The flower pots point makes sense, as does the pets, but there is all sorts of restrictive covenants - must not make any ‘avoidable noise’, must not dry clothes on the balcony, must repaint every 7 years, must allow access to the flat for pretty much anyone at any time... just wondering how standard that sounds?

All very standard.

Isn't it a good thing that your neighbours aren't allowed to annoy you by making avoidable noise?

And isn't it a good thing that your neighbours aren't allowed to make your smart block look a mess by drying washing on their balconies?

03carrd wrote: »

Wouldn’t want to forfeit ownership over not repainiting, for example.

The 'rule' is that you have to repaint every 7 years. If you're not prepared to repaint every 7 years - don't buy this flat.

(In reality, the freeholder may not care. And if they did, you would get many warnings before court action for forfeiture.)

03carrd wrote: »

Does the Landlord and Tenant Act offer any protection from unreasonable freeholders?

Yes.

davidmcn

03carrd wrote: »

must not make any ‘avoidable noise’

Being realistic, it means don't be so chronically noisy that somebody feels obliged to take legal action against you because of it. I presume you'd abide by that anyway.

must not dry clothes on the balcony

Pretty standard anywhere with balconies.

Forfeiture of leases is incredibly rare, if minor transgressions were treated as strictly as you seem to fear then thousands of people would be kicked out of their flats every day.

Norman_Castle

03carrd wrote: »

just feels risky given what I’ve read about forfeiture etc. Wouldn’t want to forfeit ownership over not repainiting, for example. Does the Landlord and Tenant Act offer any protection from unreasonable freeholders?

You will be given the opportunity to put right any breaches of the lease before forfeiture could be considered. If you dispute the breach a court would decide whats reasonable. If you hadn't painted the property for 7 years but the decoration was clean and tidy its highly unlikely this would be considered a worthwhile breach, if it was you could simply repaint.

[Deleted User]

My advice is walk away, you will essentially be ' renting' for the period of the lease and don't have control over service charges and covenants.


Have you not been reading in the media about all those trapped not being able to sell and all the problems with new build Leasehold flats / houses ? Some banks are getting very nervous about lending on some of these leasehold properties.


It could be the costliest mistake of your life.

SouthLondonUser

Don't confuse apples and oranges. Leasehold houses are a big concern; there is no justification for that, other than developers' greed; I wouldn't touch one with a bargepole, and nor would many buyers and lenders.

Leasehold flats are a different matter. the vast majority of flats in England are leasehold. It is a shame that England hasn't caught up with the rest of the civilised and not-so-civilised world in getting rid of this feudal heritage, but it is what it is.

A leasehold flat is not, per se, a red flag. Red flags are unreasonable terms, like a ground rent that is already high and increases too quickly, eg doubles every 5 or 10 years. Is this your case? if your ground rent is, say, £150 per year doubling every 20 years, I wouldn't worry too much.

Barclays has refused to lend against leasehold flats where the leases could be "terminated" (apologies if the term is legally imprecise) if the developer became insolvent.
https://www.leaseholdknowledge.com/barclays-refuses-mortgages-over-lease-terms-at-taylor-wimpeys-prime-chobham-manor

Other things which I wouldn't expect will worry lenders but can be a hindrance for you and other buyers are specific limitations - eg in some cases you can't replace the carpet with a wooden furniture. Some leaseholders appreciate this because it reduces noises, but those who hate carpets and love wooden floors won't be too happy. Etc.