What you need to know when selling leasehold property
- Feb 4
- 4 min read
Selling a leasehold property involves a similar process to a freehold sale but with an extra layer of lease-related paperwork. It’s important for the seller to ensure information is shared about the lease, service charges and ground rent in a Leasehold Management Pack. This needs to be prepared in a timely manner and early in the conveyancing process to avoid potential delays. In our guide, we look at what you need to know to ensure a smooth sales process.
Leasehold Property vs Freehold
As a seller, one of the most common questions you might be asked by a potential buyer is who actually owns your leasehold property. Put simply, with a freehold, the seller owns the property and the land outright with no time limit. With a leasehold, the seller owns a time‑limited right to occupy the property under the lease, while a separate freeholder owns the land and the building structure. You will need to disclose details of the freeholder or managing agent.
You will also be expected to know how many years are left on the lease and if a lease extension is needed. Your buyer’s solicitor will scrutinise every aspect of the lease, as this could affect the buyer’s mortgage affordability. Be ready to answer questions about permissions and restrictions, such as sub‑letting, pets, alterations and improvements.
Another common buyer question is around the cost of owning a leasehold property. It’s important to disclose all ongoing costs in relation to a leasehold property, such as ground rent and service charges for managing communal areas. Whether your property is situated within an apartment block or a housing development, you will need to advise on any charges for maintaining the building and communal areas.
What is a Leasehold Management Pack?
When you are looking to sell a leasehold property, you will need to provide some additional documentation when compared to selling a freehold property. Your potential buyers will need to see a series of documents that confirm certain details in relation to the property, known as a Leasehold Management Pack. This is a bundle of information supplied by the freeholder or managing agent to the buyer’s solicitor, based on either an LPE1 or LPE2 form.
The Leasehold Management Pack needs to include all relevant legal documentation in relation to the lease, service charges and/or ground rent. This pack is one of the most common reasons why a sale is delayed so it is important to make sure there are no hold-ups. Slow management packs are one of the most common reasons for a leasehold sale to fall through.
Find out as soon as possible how much the freeholder, managing agent or management company charges to produce the Leasehold Management Pack. There’s a fee to produce this pack, which is passed on to the buyer, who will ask you how much this will cost.
It’s worth noting that there can sometimes be two Leasehold Property Management Packs – one for ground rent and another for service charges. This can occur when the fees are collected by different parties, leading to the need for two separate packs.
What does a Leasehold Management Pack contain?
The Leasehold Management Pack should include the following:
Lease term - the length of time remaining on the lease, e.g. 99 years.
Names and contact details of the freeholder, managing agent and/or property management company, who owns the building and land.
Copy of the registered lease and any Deeds of Variation, along with any other relevant legal documents. There might also be additional lease‑specific forms needed for the sale such as a Deed of Covenant, Licence to Assign, or Certificate of Compliance. The pack should also include any enfranchisement claims, right to manage, or statutory notices served or received in relation to the property.
Details of how the building is managed such as who is responsible for collecting ground rent and/or service charges, organising repairs, and carrying out maintenance.
Ground rent and service charges - this includes payment dates, any arrears and planned increases, and what these fees cover. For example, quarterly or annual fees for maintenance of communal areas, gardens, and/or parking bays. The current and previous years’ service charge budgets and accounts should be included, detailing individual costs for maintenance, cleaning, and insurance, and planned expenditure.
Restrictions, rules and practical issues – such as lease restrictions on use, e.g. pets, holiday lets, subletting or business use. There might also be certain regulations for the building or estate where the property is situated.
Insurance – the building insurance schedule and policy details, including the premium and level of cover, where relevant.
Fire risk assessment and compliance documents - e.g. health and safety, asbestos reports, if applicable.
Disputes, complaints, or tribunal proceedings – any information of this nature that relates to the building or management company needs to be disclosed.
If you are selling a leasehold property used for business purposes, then please see our blog Guide to buying a commercial property.
Expert leasehold property solicitors in Leicester
Without a timely Leasehold Management Pack and the necessary information relating to the property, your buyer’s conveyancer won’t be able to proceed. Therefore, if you are selling a leasehold property, always use experienced leasehold property solicitors. They can help you to negotiate the sale, check the lease, and prepare all relevant legal and financial documents.
At Salusbury Harding & Barlow, our property team can help you sell or buy a leasehold property. Our solicitors have decades of leasehold expertise. We will liaise closely with you and the building’s freeholder or management company to acquire the Leasehold Management Pack.
If you are a landlord looking to sell a leasehold property with tenants, then make sure you’re up to date with the latest legislation. The new Renters’ Rights Act and the Leasehold and Freehold Reform Act 2024 governs short-term assured tenancies and long-term, leasehold property ownership. We have a team of commercial property solicitors who act for landlords and can advise you on all relevant legislation, leases and contractual matters.
For guidance on selling a residential leasehold property, get in touch or email: s.swift@shbsolicitors.co.uk to arrange a face-to-face or telephone appointment.
Sources:
Comments