Buying, selling (and losing) a lease or buying the freehold

Content owner : home.ownership@knh.org.uk Last updated : 05/03/11

Buying a leasehold flat (if you are thinking of becoming a leaseholder)

There are two ways you can buy the lease of a council flat:


  • Under the 'Right to Buy Scheme' if you are a Council tenant and you are already living in the flat (as long as you meet certain conditions).
  • By buying the lease from the present leaseholder, if the flat has already been bought under the Right to Buy and is being sold again.

In both cases you should get a solicitor to act for you, or at least someone who is qualified to protect your interests in buying the lease. It is important that you know what charges are owing on the property so that you can make sure they are dealt with before the sale. You may have to pay some charges owed by the previous leaseholder (unless you are the first leaseholder) if they are not cleared before the sale.

It is also important that you understand that buying a lease commits you to paying charges connected with the lease. If you buy the lease from the previous leaseholder you must tell us straight away. As landlord we have the right to know who is responsible for the flat.


Selling your lease or leaving it in a will

You have the right to sell your lease as long as you tell us within one month of the sale, and the transfer is properly carried out. If you bought your flat after 18 January 2005, you must first offer it back to the council if you wish to sell within 10 years of purchase.

You can also give it to someone or leave it to someone in your will. Your solicitor should check details of all ground rent, service charges and insurance policies, so that these can be taken into account when the transfer is completed.

The transfer must be registered at Land Registry to be valid. The Land Registry charges a fee to register the new leaseholder and to register the interest of the bank or building society that has granted a mortgage against a lease.

If you sell your lease or leave it to someone, you must make sure that it is done legally to protect your interests and the interests of the person you are selling or leaving it to. Unless there is a proper legal document to show that someone else is now the leaseholder, you will still be liable in law for any charges for the property.

If you die and you have not left the lease to anyone in your will, your executors will have to decide what to do with the lease. Any service charges still unpaid will be charged against your estate. If you have anyone you would want to leave your flat to, such as your partner or children, you should make your wishes clear in your will.


Losing your home by forfeiture or repossession

There are some circumstances when the council or your mortgage lender could apply to the courts for possession of your home:

Forfeiture

Forfeiture is where the council applies to the court to end your lease because you have broken the lease conditions. This could happen if:


  • you do not pay your service charges;
  • you make alterations to your flat without written permission from KNH;
  • you, your family, visitors, lodgers or sub-tenants cause nuisance and harassment to your neighbours. If the court decides that you have seriously broken the terms of your lease, it may end the lease and give us possession of your flat. You would lose your home and would not get any payment or compensation.

Forfeiture is a drastic action. As a responsible landlord, we only use it when we have to in order to protect the interests of the council, its tenants and other leaseholders.

We will always try to help people with overdue service charges who have genuine financial problems. Before applying for forfeiture for unpaid service charges we would have to satisfy a Leasehold Valuation Tribunal that the charges were reasonable and the leaseholder had made no attempt to pay them.

Repossession by a mortgage lender

If you have taken out a mortgage to buy your lease, your mortgage lender has a 'legal charge' on your home. This means they can apply to the courts for repossession if you do not pay your mortgage. If the court grants them possession, they have the right to evict you, sell your lease and take what you owe out of the proceeds. They must give you anything that is left over, unless someone else (such as the council as your landlord or a second mortgage lender) also has a legal charge on the property for money owed.

If you have problems paying your mortgage or service charge, it's vital that you ask someone for help. Do not leave it until you are about to be evicted. We will always try to make an arrangement over service charges, and mortgage lenders will always discuss terms for making mortgage payments.

KNH has a Money Advice Team that specialises in helping customers deal with debt. If you have money worries and would like a confidential chat with one of our advisors, please get in touch.



Sub-letting your home - lodgers and sub-tenants

A lodger is someone who shares your home while you live there.

A sub-tenant rents your flat when you are not living there.

You have the right to take in lodgers or rent your flat to anyone you want to. You do not have to ask permission, but you must let us know if you do. If you sub-let, please give us your new address so that we can contact you.

Lodgers and sub-tenants do not have the same rights as you. So if your flat was repossessed by your mortgage lender or landlord, they could be evicted. However, if you let someone else rent all or part of your home, you become their landlord and you could be creating a tenancy that could be difficult for you to end. You could have considerable difficulty making them leave if you wanted your flat back. You could also have problems selling your lease if you have a 'sitting tenant'.

You should also be aware that as the leaseholder, you are responsible for the behaviour of any lodgers or sub-tenants. If they are involved in harassment or neighbour nuisance, you could end up losing your lease.

It is important that when taking in lodgers that you do not become overcrowded, or you could be committing an offence.


Buying the freehold

'Enfranchisement' is a group (or collective) right for leaseholders of flats to buy the freehold of the building they live in.

Under the Leasehold Reform, Housing and Urban Development Act 1993 as amended by the Housing Act 1996 and the Commonhold and Leasehold Reform Act 2002, certain conditions apply to buying of the freehold. Leaseholders have the right to enfranchise their building as a group if they and their building qualify.

Once the freehold has been bought by the leaseholders they can then decide how they want to manage the building, for example, managing it themselves or appointing a manager to do so on their behalf.


Useful contacts