REPORT ON PROPOSED PURCHASE OF THE LEASEHOLD PROPERTY PREPARED FOR
We have now received the contract documents from the seller’s conveyancers. We enclose the documents listed below. If you have any questions about them or about the contents of this report, please let us know.
A copy of our Supplementary Notes are enclosed. They form part of this report and contain further important information about your purchase. We will draw your particular attention to sections of the Notes which are of specific relevance to your purchase and we would strongly recommend that you read carefully through those sections.
Please read section 14.1 of the Supplementary Notes for general information about leasehold property.
As you are buying an investment property, we would draw your particular attention to section 11 of the Supplementary Notes.
COPY ENQUIRIES RAISED
These are the enquiries we have raised with the seller’s conveyancers based on our inspection of the documents supplied to us. Please read them through so that you can see what issues, if any, have arisen. If you have any further enquiries you wish us to raise at this point, please let us know.
LAND REGISTRY PLAN OF THE SELLER’S PROPERTY
This is the Land Registry title plan. It shows the extent of the property currently owned by the seller edged in red. Land Registry title plans are to a small scale and are not intended to show the precise location of each boundary.
For a plan of the property you are buying, please see section 6 below.
REGISTERS OF TITLE OF THE SELLER’S PROPERTY
This is the Land Registry “Official copy of register of title”. It contains legal information about the property currently owned by the seller, comprised in three registers. The title number, a unique identification number for the property, is shown at the top of each page of the registers. The Property Register (register A) describes the property, confirms the tenure of the property (freehold or leasehold) and contains any matters benefitting the property, such as rights of way. The Proprietorship Register (register B) gives details of the current owner and specifies the quality of the title with which the proprietor is registered (see section 1 of the Supplementary Notes). The Charges Register (register C) contains any adverse matters affecting the property, such as restrictive covenants. This section also includes mortgages, if any. There may be no Charges Register if there are no mortgages or adverse matters. There may be a separate Schedule of Restrictive Covenants.
The registers consist of numbered entries, each entry containing information about the seller’s property or matters that affect it. This information has been extracted by the Land Registry from deeds or documents relating to the seller’s property. The information relates to the seller’s estate as a whole, not just to the plot you are buying.
Any entries in the registers which we need to draw to your particular attention are referred to in the report in section 5 below.
After you have bought your property, we will register it at the Land Registry. The Land Registry will open a new set of registers relating specifically to your property. Some or all of the matters contained in the seller’s registers of title will be carried forward to the registers of your new title, depending on whether they relate specifically to your property.
DOCUMENTS FILED WITH THE REGISTERS OF THE SELLER’S TITLE
Sometimes the Land Registry will file a whole document, such as a transfer or a conveyance, with the registers of title, rather than extract parts of it onto the registers.
There are no documents filed with the seller’s title.
The following documents are filed with the seller’s title and copies are enclosed.
* dated the *.
* dated the *.
* dated the *.
The sections of the documents which we need to draw to your attention are referred to in the report below.
Report on Matters contained in the Registers and Filed Documents
Where we have concerns about any entries in the registers (section 4 above), or any documents referred to in the registers (section 5 above), we will have raised these concerns with the seller’s conveyancers and a copy of the enquiries is enclosed.
The following is a summary of any matters affecting the seller’s property as revealed in the register entries or filed documents. Remember that these matters relate to the whole of the seller’s estate, not just to the plot you are buying. For matters that relate specifically to this property, please refer to section 6 below.
Whilst there may be provisions relating to services in the registers, the development will be served by new services and we have no concerns. Please see section 6 below in relation to service rights and easements relating specifically to this plot.
The services rights and reservations affecting the seller’s estate are set out in *.
We regard the position as satisfactory.
We are making further enquiries of the seller’s conveyancers.
Rights of way to the seller’s property
Whilst there may be provisions relating to rights of way in the registers, the development will be served by new means of access and we have no concerns. Please see section 6 below in relation to any rights of way relating specifically to this plot.
The rights of way granted for the benefit of the seller’s estate are set out in *.
The estate has the benefit of a right of way on foot over *.
The estate has the benefit of a right of way on foot and with vehicles over *.
Rights of way for others over the seller’s property
The rights of way reserved over the seller’s estate are set out in *.
The seller’s property is subject to a right of way on foot over *.
The seller’s property is subject to a right of way on foot and with vehicles over *.
There are none recorded in the registers.
Please read section 5.1 of the Supplementary Notes for information about covenants.
The seller’s property is subject to restrictive covenants which are set out in *.
In particular, there is a covenant which restricts building work, which is at *. Please read section 5.2 of the Supplementary Notes for information about this particular type of covenant.
There are none recorded in the registers.
The seller’s property is said to be subject to unknown restrictive covenants. Please read section 5.3 of the Supplementary Notes for information about the implications of this.
The covenants are referred to at entry * of the Charges Register.
This property is within a development for which a legal mechanism is in place to manage the communal parts of the estate and to charge out a proportion of the cost to the owners. Please read section 5.4 of the Supplementary Notes for important information about this.
The estate management provisions are contained in the transfer dated *. See *.
The estate management provisions are contained in a separate management deed dated *, a copy of which is enclosed.
The Management Company is owned by the owners on the estate and you will become a member of the company.
Agreements and declarations
Please read section 6 of the Supplementary Notes for information about agreements and declarations.
The agreements and declarations affecting the seller’s property are set out in *.
There are none recorded in the registers.
THE DRAFT LEASE
- A) Plan
Attached to the draft lease is a plan or plans which show the extent of the property. Please check the accuracy of the plans and report any discrepancy to us. Please also note the description of the property at *
The plans also show a car parking space which is included in the title and you will need to check that this is the correct space as it appears on site.
The plans also show a car parking space which is allocated to the property. It does not form part of the property you are buying but the lease grants you rights in respect of it, subject to the right of the landlord to allocate an alternative space. You should check that this is the correct allocated space as it appears on site.
There is no car parking space forming part of the property or allocated to it.
The following rights of way are also shown on the plan: *. See section J below.
- B) Length (“Term”) of the Lease
The lease is for * years from *.
We believe that the lease term is not an issue.
We believe that the lease term is not an issue at this stage, however please read the important information at section 14.2 of the Supplementary Notes.
We believe that the lease term is an issue in that it is unusual for a starting lease term to be less than 125 years. Although not an immediate concern, the term may soon become unacceptable to some lenders unless it is extended. You need to factor in the cost of a possible future lease extension when making your financial calculations. Please read the important information at section 14.2 of the Supplementary Notes.
- C) Ground Rent
Most leases are subject to an annual “ground rent” which is payable to the landlord in addition to any service charge.
There is a ground rent of a “peppercorn” which means that effectively there is no ground rent. There is therefore no ground rent issue with this property.
There is an annual ground rent of £*. It is fixed for the term of the lease and we regard the position as acceptable.
There is an annual ground rent of £*. It is an increasing ground rent in accordance with the details below. Please read the important information about increasing ground rents at section 14.3 of the Supplementary Notes.
The ground rent review provisions are at * in lease.
The ground rent will next be reviewed on * and at * yearly intervals thereafter.
The ground rent will increase in line with the Retail Prices Index (inflation).
The ground rent will increase in line with house price inflation.
The ground rent will increase to fixed amounts as detailed in the review clause. The next increase will be on * when the ground rent will increase to £* per year. The highest level of ground rent will be £* starting in *.
- D) Service Charge
There is provision for a service charge in this lease at *. Please read through section 14.4 of the Supplementary Notes for information about service charges.
- E) Compliance
To avoid difficulties on re-sale, leases should comply with the Council for Mortgage Lenders (CML) Guidelines. We regard this lease as compliant with the Guidelines.
- F) Tenant’s Covenants
There are tenant’s covenants in this lease at *. Please read carefully through them and please read section 14.5 of the Supplementary Notes.
Covenant * prohibits you from, or requires you to obtain consent before, carrying out building works at the property. Failure to do so may lead to enforcement action by the landlord. It may also cause difficulties for you on re-sale.
Covenant * requires you to obtain the landlord’s consent to sell the property. This is unusual in residential leases and may cause delay on re-sale. However, the landlord must not withhold consent unreasonably. The provision is acceptable to lenders and we would not expect it to cause difficulties on re-sale.
- G) Landlord’s Covenants
These are contained in * of the lease. We consider that the covenants are adequate.
- H) Division Between Flat and Structure
In this draft lease, the structure (such as the roof, foundations, external and load bearing walls) are all treated as separate from the flat itself and are separately maintained by the landlord or management company. This is a satisfactory arrangement because it ensures that the condition of the building and all other shared parts of the estate is maintained. Nevertheless, it also means that you have to pay a service charge to cover your share of the cost of maintenance and this charge is likely to increase as maintenance costs increase (see section D above).
- I) Further Tenant’s Restrictions
There are further tenant’s covenants and restrictions which deal with your day to day use of the property and which are contained in * of the lease. Please read carefully through them and please read section 14.6 of the Supplementary Notes.
There are no additional restrictions in this lease. See section F above for the restrictions affecting this property.
- J) Rights Benefiting the Property
These are contained within * of the lease. Please check carefully through the rights granted and ensure that they are sufficient for your use of the property. They should entitle you to use all common means of access to the flat (internal and external), to use all service pipes and cables serving the property, to have rights of support and protection from surrounding flats together with any rights to use specific facilities (such as a bin store) and rights of entry into neighbouring flats or common parts where necessary for repair or maintenance purposes.
Specific rights of way granted are as follows and you should ensure from inspection that they are sufficient to enable you to obtain access to all parts of the property, including any garden, parking space or garage, direct from the public highway. You should also ensure that free and unobstructed access can currently be obtained over the rights of way.
There is a right of way on foot over the area shown * on the lease plan.
There is a right of way on foot and with vehicles over the area shown* on the lease plan.
- K) Rights Reserved over the Property
Note the reservations in favour of the landlord or neighbouring owners as specified in *.
Rights reserved include provisions similar to the rights granted as referred to in the section above. We do not regard these as a cause for concern. However note the various rights of entry for the landlord, neighbours and others.
- L) Management
The estate will be managed by the landlord or management company and provision for a service charge is made in the lease. The service charge is collected by the landlord or management company. Further details are given in section 7 below.
- M) Buildings Insurance
The landlord or management company insures the building and you contribute to the premium as part of the service charge. You should consider taking out your own separate insurance to cover your contents.
There is no provision in the lease for the ground rent to be suspended in the event that the property is rendered uninhabitable, for example following a fire. This means that you would continue to be liable for ground rent in these circumstances while a claim is made under the block insurance policy and while the property is being repaired.
In the event of damage to the property, the landlord or management company must use the insurance proceeds to re-instate the property. However, where the insurance proceeds are insufficient to effect reinstatement as a result of any action on your part (such as storage of combustible materials resulting in the insurance being declined or refused), you could be liable for the loss in these circumstances.
If for any reason it proves impossible to reinstate the building following an insured loss, it is usual for the insurance proceeds to be divided between the landlord and the tenants in proportion to the value of their interests. Ideally, the lease should contain a provision to this effect but there is no such provision in this lease.
- N) Agreements and Declarations
There are agreements, declarations or miscellaneous additional provisions at * which you should read through carefully.
DOCUMENTS RELATING TO MANAGEMENT
The structure of the building and the communal parts of the estate will be managed by the landlord or management company – see sections H, L and M in section 6 above.
We enclose the following documents which we have received in relation to the management of the estate:
You will appreciate that as this is a lease of a new property, there are no previous management accounts available and we are unable to predict how well the estate will be managed in the future.
SELLER’S INFORMATION FORM
The seller has not supplied any information forms.
We enclose a form entitled * provided to us by the seller which contains information about the development. Please read carefully through the information supplied. If you have any questions about it or if you think that any of the information given is incorrect, please let us know.
Please read sections 7.2 of the Supplementary Notes (as to boundaries), section 7.3 (as to planning and building regulations issues) and sections 7.4 and 7.5 (as to guarantees).
OTHER DOCUMENTS SUPPLIED BY THE SELLER
The seller has not supplied any other documents.
The seller has supplied the following further documents:
Contractor’s guarantee for *. Please read section 7.5 of the Supplementary Notes for information about guarantees.
Building guarantee paperwork (*). The property will have the benefit of cover for ten years. Please read section 7.6 of the Supplementary Notes for information about building guarantees.
Architect’s certificate. Please read section 7.7 of the Supplementary Notes for important information about the limitations of an architect’s certificate.
Indemnity Policy for *. Please read section 9 of the Supplementary Notes for important information about indemnity policies.
THE PURCHASE CONTRACT
The contract is a binding agreement between you and the seller. We recommend that you check the main details including your names, the property description and purchase price and then read section 8 of the Supplementary Notes for further important information about the contract (particularly the section on New Property).
Please pay particular attention to the following clauses in the contract: *.