Are you tempted to buy a property that needs work? Putting your money into a ‘doer-upper’ project can be a good way to purchase at a cheaper price, giving you the opportunity to put your own stamp on your home while adding capital value. However, if you have your heart set on a leasehold property, your plans may not be so easy to achieve.
While the freeholder owns the building and the ground it stands on, the leaseholder owns the right to occupy a specified part of the building (e.g., the flat) for a set period of time according to the terms of the lease. Even if leasehold ownership comes with a share of freehold, your ownership of the property will still be governed by the lease. This distinction between the two types of property ownership is a critical factor when it comes to making refurbishments and alterations that are deemed to be ‘structural’.
If you’re thinking of buying a leasehold ‘fixer upper’, there are two things you should absolutely check out before you commit to the purchase.
It should go without saying that any purchase of a property that is advertised as being in need of modernisation should be thoroughly investigated by a qualified surveyor. As experienced RICS accredited Chartered Surveyors, Cosey Homes are ideally placed to help with this. We offer a choice of surveys including in-depth RICS Building Surveys and Specific Structural Inspections that are designed to give you a thorough insight into the structural condition of the property. Armed with the necessary facts, you can then make an informed decision on how to proceed with the purchase.
As mentioned above, the lease is the legal basis for your rights and responsibilities as a property owner. Before you make any refurbishment plans, check the lease document carefully to see whether these are permitted. You should be aware that structural alterations are often expressly prohibited and even a change to the internal layout may not be possible. Many alterations may only be made with prior landlord consent via a Licence to Alter. Every lease is different, so ask your conveyancer to scrutinise the document to ensure that you will be able to do up the property as you wish.
Once you have bought the property at a price that reflects its state of repair and overall condition, and assuming that you are able to carry out your renovation plans under the terms of the lease, the next step is to obtain the necessary consents before you can start the build. There are four different consents you may need to apply for.
The Licence to Alter (or Licence for Alterations) is the freeholder’s formal written consent to the proposed work. It is usually (but not exclusively) required for the following types of work:
Your application must contain detailed plans and specifications for approval by the landlord’s surveyor (at your expense). The freeholder cannot unreasonably refuse your LTA request as long as you meet all reasonable conditions, and permission will then be granted for you to carry out the works according to the terms of the LTA.
If the proposed works include structural alterations that affect a party wall or other structure that is shared between building owners, you have a legal obligation to obtain your adjoining neighbours’ consent according to the Party Wall Act 1996 before work can begin.
From loft conversions in top floor flats to ground floor extensions into the garden and other projects that involve cutting into a party wall, this requires following a complex legal process that is best done with the help of a specialist party wall surveyor. Structural alterations in a purpose-built block or converted flat may involve serving notice on many parties, which can be expensive and take a long time to obtain everyone’s consent.
While much is made of homeowners’ permitted development rights to allow certain improvements to be made without needing planning consent, you should know that these rights do NOT apply to leasehold properties. Depending on the structural changes you are planning to make to your home, this means you may need to apply to your local council for full planning permission.
In addition, should the property in question be a designated listed building or form part of a Conservation Area, further planning restrictions will apply on any alterations that affect the special historical or architectural character of the building or neighbourhood. Make sure you contact your local planning officer in good time to discuss your plans and follow their advice.
Last, but by no means least, unless you were able to buy the property using your own finance, you should check whether your mortgage lender also needs to approve your plans for refurbishment. If you are making substantial alterations or additions to the property that will affect its value, you should certainly expect them to take an interest. Every lender has their own criteria and processes in place, so contact them at the earliest opportunity to check what you need to do.
If you are considering the purchase of a leasehold ‘doer upper’, whether as a home for you and your family or as a property investment, having access to expert advice and professional guidance is essential. The steps involved in the purchasing process should be clearly geared around your refurbishment plans to ensure you will indeed be able to carry them out in accordance with the lease.
Obtaining the necessary consents for your build can be onerous and costly undertakings, but only you can make a decision on the viability of your property project. At Cosey Homes, we are at your service with a wealth of professional expertise and a highly skilled team of Chartered Surveyors, structural engineers and building engineers to put at your disposal. Please feel free to get in touch.
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