Your Lease
What is a lease?
A lease is a contract between the leaseholder and the freeholder, (King Street Housing Society) giving conditional ownership for a fixed period of time usually 99 to 125 years.
The lease sets out the contractual obligations of the two parties: what the leaseholder has contracted to do, and what King Street Housing is bound to do. The leaseholder's obligations will include payment of the ground rent (if any) and contribution to the costs of maintaining and managing the building. The lease will probably also place certain conditions on the use and occupation of the flat. King Street will usually be required to manage and maintain the structure, exterior and common areas of the property, to collect service charges from all the leaseholders and keep the accounts.
Leaseholders are not necessarily entirely free to do whatever they want in or with the flat - the lease comes with conditions, to protect the rights of everyone with an interest in the building. For example, some schemes have restrictions on the age of those who can live there.
King Street Housing is not always the freeholder of the flat, sometimes we are also a leaseholder and have granted you a sub lease.
There are a variety of leases so you need to read your lease to understand your specific obligations.
What are your contractual rights?
You have the right to expect the Society to maintain and repair the building and manage the common parts – for example communal corridors and staircases.
What are your responsibilities?
These will be the requirements to keep the inside of the flat in good order, to pay (on time) a share of the costs of maintaining and running the building, to behave in a neighbourly manner and not to do certain things without the landlord's consent, for example, make alterations or sublet.
These rights and responsibilities will be set out in your lease.
What is ground rent?
Because leasehold is a tenancy, it is subject to the payment of a rent (which may be a small amount) to the landlord. Ground rent is a specific requirement of the lease and must be paid on the due date.
What are service charges?
Service charges are payments by the leaseholder to the landlord for all the services the landlord provides. These will include maintenance and repairs, insurance of the building and, in some cases, provision of central heating, lifts, estate staff, lighting and cleaning of common areas etc. Usually the charges will also include the costs of management, either by the landlord or by a professional managing agent.
Service charges will vary from year to year; they can go up or down without any limit other than that they are reasonable.
Details of what can (and cannot) be charged by the landlord and the proportion of the charge to be paid by the individual leaseholder will all be set out in the lease. The landlord arranges provision of the services. The leaseholder pays for them.
All costs must be met by the leaseholders; the landlord will generally make no financial contribution. Most modern leases allow for the landlord to collect service charges in advance, repaying any surplus or collecting any shortfall at the end of the year.
The landlord can only recover the costs of services which are reasonable. Leaseholders have rights to challenge service charges they feel are unreasonable at the Leasehold valuation tribunal.
What are reserve funds?
Many leases provide for the landlord to collect sums in advance to create a reserve or 'sinking' fund to ensure that sufficient money is available for future scheduled major works, such as external decorations or lift replacement. The lease will set out the arrangements for this and when regular, cyclical, maintenance works are due. Contributions to the reserve fund are not repayable when the flat is sold. If there is insufficient money in the reserve fund to deal with major works the costs will be shared between owners in the proportions set out in the individual leases.
How is the building insured?
The lease will normally require the landlord to take out adequate insurance for the building and the common parts, and will give him the right to recover the cost of the premium through the service charges. This policy will not cover the possessions of individual leaseholders, for which contents insurance should be taken out.
For more information visit the LEASE website: www.lease-advice.org
LEASE provides free advice and guidance to leaseholders and landlords on all aspects of leasehold law, including problems with service charges, the right to manage, possession proceedings and rights to lease extension and freehold acquisition. LEASE is funded by the Department for Communities and Local Government and the National Assembly for Wales.
