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Joshua
Joshua, Lawyer
Category: Property Law
Satisfied Customers: 28247
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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I have a question relating to leasehold contract law.

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Hi, I have a question relating to leasehold contract law.
Customer: replied 16 days ago.
Would you be able to translate a leasehold contract clause to plain English for me?
Hello,

I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.

I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

Thank you!

Hello and thank you for your question. My name is ***** ***** I will be very pleased to assist you. I'm a practising lawyer in England with over 15 years’ experience. Please be aware that although I will endeavour to reply to you promptly, I am also in full time private practice and so I may not be available to respond immediately and it may also take me a few minutes to prepare a reply. The site will notify you as soon as I respond. I look forward to working with you to answer your question fully.

Do you have some specific questions regarding a lease? If so I would be delighted to assist

Customer: replied 16 days ago.
Hi. Thank you for getting back to me. I have the following clause in my leasehold contract. Can you please explain to me in plain English what this actually means? I just want to make sure I am understanding this correctly. Any insight into this would be very highly appreciated."Rent means 0.1% of the Premium escalating as provided for in clause 8 and payable on 1 January and 1 July each year or such other date as may be notified to the Tenant in writing by the Landlord from time to time."
  1. I assume this is a residential lease?
  2. Can I ask what the price paid for the lease is as stated in the lease? This isn't necessarily what you paid unless you were the first purchaser but what is stated in the lease as the first person to take the lease originally paid?

I'm following up on the above. Without some further information from you as above, I am limited in what I can say on the matter but in the hope it is helpful nonetheless, I will provide you with the following broad answer. If you are able to kindly provide me with the above further information or if you have any further questions generally, I will be delighted to expand on the following - please just reply back to me in this case:

Notwithstanding the above, in general terms from what you say, the clause you quote from sets the ground rent that will be paid annually for the lease. It states that it shall be 0.1% of the price that was originally paid by the original lease holder ( this may be you but may not be - it will be the first person that took the lease which would often be from when the property was built or converted into a flat). In our case, the price paid or premium as it is sometimes referred to will be stated in the lease usually in the initial few pages. So for example, if the original price for the property was hundred and £150,000 the annual ground rent would be £150.

It further goes on to say that the ground rent will increase in accordance with the provisions of clause 8 which I have not seen but would usually provide for some form of increase either in accordance with an index like RPI or set increases at intervals.

I hope the above is of some assistance but if you have any further questions, please revert to me

Customer: replied 16 days ago.
Thank you. Further clarification - yes, this is a residential property; a new build apartment so I will be its first leaseholder. The purchase price of the flat is £310,000. So therefore 0.1% will make it £310. However, the issue that I have with that clause is that the ground rent clause doesn't state the words "per annum" or "per year" or "yearly". So looking at it, to me it sounds I will be paying the 0.1% twice a year (January and July).
Customer: replied 16 days ago.
I may be wrong as I am not a solicitor so that's why I am seeking some professional advice. The clause 8 as you mentioned states that the ground rent will increase after 25 years in line with RPI.
Customer: replied 16 days ago.
Like I said, my only problem is that it doesn't state that this is 0.1% annually. This is what was agreed and I am worried that if the clause stays as is, it might make me liable to pay this ground rent amount more than once a year.

Would you be able to post the exact clause or lease if you have it using the paperclip icon?

Customer: replied 13 days ago.
Hi. The whole lease has 28 pages so I don't expect you to read all that. I know you have better things to do with your time. But please see below the clause "Rent" and then also the clause 8 that is connected to this.
Customer: replied 13 days ago.
File attached (6VV7Q37)

Thank you. This appears that the rent of 0.1% of premium is payable twice a year - i.e. from what you say £620/year.

did your solicitor point out the amount of rent payable? my concern in particular, is that if it breaches the £1000/year limit (in London) and £250/year limit (elsewhere) it will not longer be a low rent lease but rather technically it becomes an assured shorthold tenancy if you occupy it as your main residence (albeit with a very long term) which means certain rights for the way, in particular the right of first refusal if the landlord sells the freehold, and that the landlord can serve a s8 notice on non payment of rent for more than 8 weeks and you can lose the lease.

This is turn may mean that certain lenders will refuse to lend on the property. depending depending upon the advice you received when you bought the property, it seems to me, some questions may need to be raised with your solicitor.

Customer: replied 13 days ago.
Thank you for this. Looking at this clause I thought the same. Unfortunately, my solicitor is totally incompetent and refuses to communicate and explain the terms of the lease to me. So unless I deal with it myself, there is no chance she will pick up on it.
Customer: replied 13 days ago.
The agreement with the developers was 0.1% of the Premium a year. This is on all the marketing materials, in my reservation form and also the CML I received when my offer on the flat was accepted. What legal measures can I take against the developer? I understand I don't have to sign the contracts and just completely pull out of the purchase, but is there another way of putting pressure on them to honour the initial agreement?
Customer: replied 13 days ago.
The communication I got so far is that the amendments to the contracts (the Lease and Conditions of Sale) are not allowed as this is a big development and all leases and contracts are the same. Is this true? Surely though, in this case, they are in breach of our original agreement.

if you have clear documentation showing that the rent is 0.1% per year then retain this as it seems to me you could if necessary apply for a declaration from court under the contra preferentum rule for an interpretation of the lease in line with the marketing information if all else failed. The Contra Preferentum rule provides that in the event of any doubt in relation to the construction of an agreement, it will be interpreted in favour of the individual who did not prepare the agreement. May I clarify, is this a property you have not yet bought?

Customer: replied 13 days ago.
Thank you. Yes, I am in a process of buying a new build leasehold apartment in London. This was the lease I was sent and asked to sign by my solicitors (with no explanation, no questions raised!). I went through the document and rightly so raised several concerns. The answer I got was that the amendments to the contracts are prohibited. I don't understand why! A contract should be a document that is acceptable to both parties, not heavily stacked against the leaseholder. At least, that's how I always thought about contracts.
Customer: replied 13 days ago.
Could I demand the "Rent" clause to be changed as this is clear evidence of misleading selling practices? I was also thinking about reporting the developer to the Competition and Markets Authority as I know that they are already investigating several other big developers about their shady leasehold property practices.

Developers generally take this position because the lease is supposed to be in substantively identical form for all tenants but there appears to be poor drafting in the rent provision as it fails to make clear that it is an annual payment payable in two equal instalments (if that is the intention). At the very very least an enquiry should be raised asking for confirmation that the rent is annual not twice yearly but even this is not ideal. In terms of reports, there is an option to involve the Consumer Code for New Houses in terms of a complaints resolution process.

Customer: replied 13 days ago.
Ok, thank you. This makes sense. I don't mind two installments as long as the rent is set at 0.1% of the Premium per annum in order to reflect the initial agreement. I do want this written in the Lease contract. I don't see the reason why this should not be amended if it was an error on the developer's side.

I concur that it should be made clear and adding I think around three words to ensure it is clear it is an annual amount payable in two instalments would not mean the lease is in substantively different form to others providing they do intend to charge an annual payment and it is not an attempt at sharp practice.

Customer: replied 13 days ago.
If I can ask, why is it that the contracts (leases) need to be in the same form as the others? As this is a separate flat and a separate contract, I don't quite understand why it can't be renegotiated and different from others. As each flat sells for different price, has different square footage and enjoys different incentives (sometimes the prices are significantly dropped compared to other apartments), why can't other terms of the lease be changed too?

Two reasons - one it is a requirement of almost every lender and so where it is not the case it may be difficult to secure a mortgage on a flat. The second reason is that the point of leases is to create an interconnected set of rights and obligations between tenants in the building and if the lease is not in substantially the same form, it can become very difficult to ascertain which tenants have rights as against each other and the landlord if leases contained varying rights and obligations.

There are continuing efforts to replace leasehold tenure with a more modern and arguably much better and flexible form of ownership called Commonhold. Commonhold was introduced as a legal form of tenure years ago but has struggled to gain any traction. There is now renewed efforts to make this a reality in part due to actions such as this landlord to impose high rents.

Customer: replied 13 days ago.
Thank you. Yes, I know all about Commonhold and the planned changes to the legislation. Hopefully, this will put an end to the exploitative practices of Leasehold; the UK is virtually the only developed country where this system continues to benefit the greedy and unscrupulous developers and freeholders.
Customer: replied 13 days ago.
If I can't amend the Lease document due to the reasons you gave above, will I be able to amend the Conditions of Sale? This is a separate document between me and the developer/their solicitors. There is one clause there I want to change. Would this be amendable? Or does this also have to stay the same as for the other leaseholders in the development?

typically developers take the view that they will not amend substantively the conditions of sale though there is generally less rigidity in relation to the contract than the lease. In relation to the provision with regards ***** ***** rent, if the lease will not be amended, at a bare minimum, your solicitor should consider raising an enquiry seeking confirmation that the provision in relation to ground rent is an annual payment split into two monthly instalments and that response from the developer should be kept safely by you with the deeds and property records you retain as it would be helpful in relation to any future sale and in the hopefully unlikely event of any dispute is between you and the developer in the future

Customer: replied 12 days ago.
Thank you so much for this. I will be taking your advice and in the first instance request the amendment. As a last resort, I will request that my solicitor raise an enquiry seeking the confirmation you described above.One last thing, through the communication with the developer's side, I have found out that my solicitor has chosen not to pass on my enquiries and requests to the other side. This is at best incompetence and at worst negligence. What can I do at this point? Can I cut out my solicitor and communicate directly with the other side and their solicitor? Can I report my soliciting firm to a professional body for not carrying out their duties according to the set industry standards?

In the first instance you can ask for an explanation and if not satisfied escalate to their supervisor. if you remain unsatisfied, you can escalate to a formal complaint process and the legal ombudsman. It is possible, I do not suggest this is the case, that there is a reason why enquiries have not been passed on as not all enquiries are appropriate - though these would typically relate to enquiries as regards ***** ***** of the property as opposed to the legal title.

Joshua, Lawyer
Category: Property Law
Satisfied Customers: 28247
Experience: LL.B (Hons), Higher Prof. Dip. Law & Practice
Joshua and other Property Law Specialists are ready to help you
Customer: replied 12 days ago.
Thank you so much for your excellent advice. This has been truly helpful!
Customer: replied 10 days ago.
Hello. Can I ask one more question regarding engrossment fees?

Of course...

Customer: replied 10 days ago.
In the Conditions of Sale, I am asked to pay £200 + VAT to my seller's solicitor for the lease preparation. I know that new build contracts tend to have engrossment fees, but do I have any power as a buyer to have this clause removed or the fees waived?
Customer: replied 10 days ago.
This seems unreasonably high and I am not even sure why this obligation would be placed on me in the first place.

You can ask but the answer will likely be no. It is typically the solicitors main element of profit as they usually agree a low fixed fee to get the business from the developer.

Customer: replied 10 days ago.
Thank you. Yet again, this is helpful as I need to pick my battles in this fight, so it seems like this might not be worth fighting.Again, many thanks for everything.

I'm pleased I could continue to assist.

Customer: replied 8 days ago.
Hello Joshua, I just wanted to let you know that I argued my case regarding the ground rent clause in the lease based exactly on the points you raised and the professional advice that you have given me over these past few days. This has been successful; the developer and their solicitor agreed to amend the lease and put in the words 'per annum' to reflect that the yearly ground rent stays at 0.1% of the Premium.Yet, again, a huge thank you for your assistance on this. This would not be possible without your expertise and involvement as I wouldn't be able to put together such a solid argument myself.Are you able/allowed to let me know what law firm/private practice you work for? This would be very helpful for me in the future as there might be other legal matters for which I will need to instruct a solicitor.

Great news - well played. I am not allowed to accept client referrals unfortunately under the terms of service but if you would like to confirm your email address I am happy to drop you a line

Customer: replied 8 days ago.
Sure...this makes sense
Customer: replied 8 days ago.
email:***@******.***

Many thanks - I have dropped you a line